Amazon ups the ante in war against Apple

September 7, 2012, 1:14 PM UTC

FORTUNE — The business-focused battle-of-the-titans storyline of late has been ‘Apple versus Samsung,’ widely understood as a proxy for ‘Apple versus Google.’ If Jeff Bezos accomplished one thing in his clear, solid, and meticulously articulated Kindle presentation in Santa Monica, Calif., Thursday morning, it was to make the case to a consumer-focused audience that ‘Amazon versus Apple’ is as compelling a narrative. In fact, while mentioning Apple only once in his 71 minutes onstage at a vast airplane hangar—quoting from a product review that compared the two companies’ offerings—Bezos made it simple to understand the difference between the two increasingly competitive companies.

Amazon (AMZN) is not about gadgets, said Bezos, in a clear swipe at Apple (AAPL), which most definitely is about gadgets. Amazon is about services. Indeed, what is most  impressive about the bevy of new-and-improved Kindles Bezos demonstrated isn’t their technical specifications. (They are snazzy. Enough said.) It’s the clever—even cute—services Amazon introduced with them. Some examples:

* FreeTime allows parents to set time limits on their children’s usage of their Kindles. (The feature includes ‘Kayak’-like dials so a parent can tweak permission, say, to include unlimited book reading but precisely 30 minutes more of game playing or movie watching. I will buy one simply to end the ceaseless negotiations over screen time with my daughter. What’s more, I sincerely hope Apple finds a legal way to copy this feature on the iPhone and iPad.)

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* Immersion Reading marries ebooks with audio books so that a reader sees highlighted words as they are being read by the narrator. The powerful ramifications for foreign-language learners and new readers are obvious.

* X-ray is Amazon’s buzzword for helpful information a reader or watcher can call up without leaving their reader or video player application. This is a feature I’ve wanted forever. It’s a good example of how the tablet experience can be better than the physical book or wide-screen TV experience. It’s also a good example of Amazon’s differentiation. I can leave my e-reader application on iPad and search the web; Amazon is offering me a way to not leave.

* “Time to read” is a new feature Amazon will include at the bottom of the page in an ebook. It estimates how long it will take the reader to finish a chapter or the entire book, based on their reading habits. Bezos said customers complain that with a physical book they can see from their bookmark how much of the book they have left, a feeling they couldn’t replicate in an ebook. It reminds me of the time Bezos told me he wanted to figure out how to re-create the smell of a book, so mindful is he of the emotional bonds we have with books with bindings.

In so many ways Amazon has established itself as a credible alternative to Apple in the tablet market. (Bezos said the Kindle Fire had 22% of the U.S. tablet market last year and that it is the top-selling product on, but he didn’t break out any numbers.) The way Amazon got there was by playing to its strengths. Apple is a legitimate book publisher, strengthening its e-reader hand. (I am personally excited Amazon intends to try to bring back the concept of serialized books with a cool product that offers customers all installments, delivered serially, for $1.99.) Amazon’s new Kindle Paperwhite, with advanced lighting and display technology, seems like a step ahead of Apple, again, in the areas consumers already love about Amazon.

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Amazon also makes for a stark contrast with Apple in terms of price. The new Kindle Fire HD tops out at $499, and including wireless service costs $548 in the first year. A comparable iPad costs $959. This makes sense as Amazon always is about the lowest price. By dropping the price of its oldest Kindle to $69, Amazon also differentiates itself from Apple, which more often phases out its oldest models. Said Bezos: “You don’t need to be on the upgrade treadmill with Amazon.”

A glitzy presentation of satisfyingly new products shouldn’t obscure the fact that Amazon remains well behind Apple in the tablet market. Amazon showed nice music and photo integration features on Thursday. But most digital music and many photo collections are on Apple platforms. (The Wall Street Journal reported Thursday that Apple is planning a Pandora-like service, a move that would deepen its music offerings.) Amazon has a powerful ecosystem. But Apple’s is even more powerful in key areas. Fighting an ecosystem leader is an uphill battle.

Still, it’s refreshing as a consumer and a business observer to see titans going head to head with each with fresh ideas. Innovation isn’t dead. It will take more than a patent case to kill it.

Adam Lashinsky studied Apple’s presentation techniques in his book, Inside Apple; He wrote in FORTUNE about Amazon’s program to hire military veterans earlier this year.

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