Melville House Books

iPad and Kindle go toe to toe

Dan Gallagher at the Wall Street Journal reports here that Amazon.com is having more and more difficulty holding onto its lead position in market share for e-readers, a struggle that took a dramatic turn yesterday: “Despite its early lead in the fast-growing e-book market, Amazon.com Inc. (AMZN) faces growing competition from tech giants Google Inc. (GOOG) and Apple Inc. (AAPL), according to one analyst. Marianne Wolk of Susquehanna downgraded Amazon to a neutral rating on Monday. In a note to clients, the analyst cited ‘intensifying competition’ in the e-book market, which is creating more uncertainty around the company’s Kindle business.”

“Amazon sells the Kindle e-book reader as well as electronic versions of books for the device. Last week, the company cut the e-reader’s price to $189 from $259. The company has never disclosed specific sales data for the device, though analysts believe the Kindle accounts for about 60% of the existing e-book market,” according to the WSJ.

The Kindle is facing quite a bit of competition now (see above), with Sony, B&N and the mighty iPad coming on strong in the marketplace. The WSJ quotes analyst Wolk as saying, “‘With moves pending by Apple and Google, rising competition is raising the uncertainty regarding eReader, eBook, and Book profit growth rates, capping the contribution to Amazon’s valuation from these sectors. Thus, we are less confident in the multiple expansion we previously forecast.’”

Amazon shares were down 1.4% in trading Monday. The WSJ reports, “The stock is down about 20% since peaking at an all-time high above the $150 mark in mid-April, on a split-adjusted basis.”

Mother of God, is this the end of Ricco?

Valerie Merians is the co-founder and co-publisher of Melville House.