By Philip Elmer-DeWitt
May 26, 2010

By not competing, Jeff Bezos tells stockholders at Amazon’s annual meeting

Although Amazon’s (AMZN) Kindle has the largest share of the U.S. e-reader market — 62%, according to a ChangeWave survey conducted in early May — the iPad is gaining fast.

In the same survey — fielded only a month or so after the iPad went on sale, Apple’s (AAPL) tablet computer was already in the hands of 16% of the 245 respondents who said they owned an e-reader.

Moreover, reading books is only one of a dozen things people are doing with their iPads, from surfing the Web and checking e-mail to running apps and watching videos. How can the Kindle compete?

A shareholder put the question to Amazon CEO Jeff Bezos, and Bezos had a ready answer:

“The Kindle will compete with these LCD devices like the iPad by being a very focused product,” he said. “Serious readers are going to want a purpose-built device, because it’s an important activity for them.”

It’s like the difference between a camera built into a cell phone and a stand-alone camera, he said. “If an activity is important, you get dedicated devices.”

The black-and-white Kindle may look like an iPad designed by the Amish, as one wag put it, but for reading books it does have many advantages, among them:

  • Readability. E-ink is easier on the eyes that LCD screens, especially in bright sunlight.
  • Lighter. 10.2 ounces vs. 1.5 pounds.
  • Longer battery life. 1 week vs. 10 hours.
  • Less expensive. From $259 to $489 vs. $499 to $829.
  • Cheaper connectivity. Free 3G wireless vs. 3G for $15 to $30 per month (or free Wi-Fi).

A color Kindle is some ways off, Bezos said.

But at the right price point — maybe $150 — his plain Amish black-and-while Kindle should do just fine.

A webcast replay of the 2-hour shareholder meeting is available here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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