Originally published: April 12, 2012
Last updated: April 19, 2012 - 4:00pm
If Apple loses the legal case filed against it and book publishers over e-book pricing, will it be deeply wounded in its growing rivalry with Amazon? Not likely, analysts say.
The Justice Department’s lawsuit against the company and five publishers, three of which settled the case, paints a vivid picture of Apple’s thinking from several years ago about how it could use its entry into electronic books to hurt Amazon, a growing player in digital media and devices with the Kindle. At the time, Apple saw having a competitive e-book offering as a critical element of its strategy for introducing the iPad. In an e-mail sent by Eddy Cue, the Apple executive in charge of the company’s Internet services, to Steven P. Jobs, then Apple’s chief executive, about a year before Apple introduced the iPad and iBookstore, Mr. Cue said, “It would be very easy for us to compete and I think trounce Amazon by opening up our own ebook store.” Apple eventually cut a deal with publishers that gave them control over pricing of e-books and that forced other retailers, including Amazon, to raise prices, the lawsuit alleges. Apple’s bluster, though, was unfounded. Amazon may have lost some share in e-books, but it still dominates the fast-growing market. At the same time, Apple’s failure to trounce Amazon in e-books did little to diminish the appeal of the iPad, which became a smash hit for other reasons. James McQuivey, an analyst at Forrester Research, said research by his company indicated that games, Web browsing, Facebook and other applications are bigger parts of the appeal of the iPad than e-books.
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