In Kindle vs. Apple Tablet, Sony Surefire Loser
The company never never should have messed with a product like this in the first place.
Greetings from New York where I remain an unabashed fanboy when it comes to Amazon's (AMZN) Kindle. As such I'm looking forward to the fight looming between my machine and the seemingly inevitable Apple (AAPL) whatever-Tablet. Based on rumors and the fact that the iPhone has a pathetic book application, reading books, magazines and the web are smart bets to be positioned front and center on the new product. What does it mean for the companies and related stocks? Here's the back-of-the-envelope handicapping:
- The Reading Public (You) breaks about even. The Kindle hardware is expensive. The Apple tablet will likely be priced around a gazillion dollars. The price of e-books won't go down as Amazon is already squeezing the life-blood out of publishers. If anything, the book prices will go higher as Apple and Amazon curry favor (note the improved terms Amazon is offering publishers in the deal announced today).
- McGraw-Hill (MHP) and John Wiley & Sons (JW.A) win slightly but not huge. Both companies sell books and both claim to be "information providers via electronic and printed mediums." Denial, thy name is book publishers. The heavyweights in this industry are private and not likely to do IPOs based on another reader.
- Time Warner (TWX) is my sleeper pick as a winner. Magazine websites are generally horrible. The rise of tablets gives them another shot at making user-friendly, rich experiences. Being huge, Time Warner will probably bungle it but, hey, what do they have to lose? The relevance of SportsIllustrated.com? Please, my grandpa doesn't surf.
- Apple and Amazon is about a push. Neither company is relying on e-books for their core revenues or profits. Apple can't revolutionize reading the way they did listening to tunes, but they can take a meaningful bite out of the online magazine business. The Kindle is a black and white reader. An Apple tablet is going to be a tech marvel with explosive colors. The former stinks at magazines. The latter will be huge overkill for books or even newspapers. Look for magazine deals with the tablet announcement.
- Sony (SNE) is your only surefire loser from this. Their reader hasn't gotten a foothold yet and more competition simply greases the mountain on a product Sony shouldn't have messed with in the first place.
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