Apple iPad: A Color Kindle for Dummies?

A big part of the iPad’s future success hinges on its ability to win in the budding e-reader market. Some analysts have dubbed the iPad as an Amazon Kindle killer, citing the iPad’s ability to provide a full media experience. Other analysts aren’t convinced.

First, the naysayers.

“In a nutshell, the iPad is another e-book reader, another e-book store,” Gartner analyst Van Baker told CIO.com shortly after the iPad was announced in San Francisco last week. “It will likely be a very successful product, but it’s not going to transform the publishing industry.”

Harsher words come from Rebecca Wettemann, analyst at Nucleus Research. “We don’t see the iPad as a big game changer,” she told CIO.com. “What we’ve got is a color Kindle—a Kindle for dummies—at a higher price point.”

[ It won’t be easy for the iPad to change the e-reader and publishing markets, but here’s five recent Apple successes that give the iPad an edge, reports CIO.com. ]

Among the major points of contention is whether or not consumers want a great e-reading experience (which the Kindle provides with its e-ink technology) or a multi-media one (which the iPad delivers with its browser, video and color capabilities).

Count Adam Leach, analyst at Ovum, in the iPad’s corner. “The iPad’s advantage over the similarly priced Kindle DX is that it provides a host of multimedia functions as well as e-book reading,” he wrote in a research note. “Although this seems like bad news for Amazon, the iPad will certainly increase the market for e-books.”

In-Stat analyst Stephanie Ethier doesn’t agree. “In the short term, though, I don’t see the iPad demolishing Kindle sales,” she wrote in a research note, adding, “fundamentally, customers are purchasing Kindles and Sony E-readers for a revolutionary reading experience.”

Either way, Piper Jaffray analyst Gene Munster doesn’t think it’ll matter much this year. He writes: “We believe Amazon sold one million Kindles in the quarter vs. our previous estimate of 750,00. Kindle competition from Apple’s iPad may weigh on Amazon’s multiple, but is not expected to impact Amazon’s business in 2010 … The bottom line, while the iPad will take share from Kindle in 2011, we believe the digital books segment (we estimate growing 122 percent in 2010), is too small to move the needle in 2010.”

As analysts take sides, Amazon is clearly concerned.

In the span of three days, which included the weekend following the iPad event, Amazon pulled books from Macmillan from its shelves and then brought them back. Macmillan, one of the largest publishers in the U.S., had joined other major publishers such as Penguin, HarperCollins, Simon & Schuster, and Hachette Group, in support of the iPad and iBook Store.

The Amazon-Macmillan brouhaha concerns pricing of e-books. Amazon had been promoting the Kindle by pricing e-books for new releases and best sellers at $9.99. Macmillan wanted e-books to be priced higher; during the iPad event, Apple CEO Steve Jobs showcased e-books costing around $15. On Sunday, Amazon agreed to raise prices.

Conspicuously missing from the list of big name publishers backing the Apple and the iPad is McGraw-Hill. Yet McGraw-Hill plans to throw its support behind the iPad. “In the near future, you will undoubtedly see a McGraw-Hill e-book for the college market running on an Apple tablet,” CEO Terry McGraw said during the company’s earnings call last week.

McGraw added that McGraw-Hill books on CourseSmart, the industry e-book consortium, are already available to students on the iPhone. CourseSmart, which provides 8,800 e-textbooks for college students via an iPhone app, said it plans to release an iPad app at the end of March that will take advantage of the iPad’s larger screen size.

Tom Kaneshige is a senior writer for CIO.com in Silicon Valley. Send him an email at tkaneshige@cio.com. Or follow him on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline.