It had to happen.  Apple’s foray into the eBook market with its iPad had to get a reaction from Amazon, but nobody quite expected the severity of this reaction. Amazon has responded amazingly strongly and in several different ways.

1.  Kindle Apps

Prior to the iPad launch, Amazon made the announcement of the opening of an applications store, and an invitation for developers to come up with apps in the same way that they did for the iPhone and the iPad. This was an apparent attempt to offer the Kindle as a genuine competitor to the iPad.

Without some other use of the Kindle other than as a dedicated e-reader, Amazon knew that it was destined to suffer a knock-out blow from Apple. It is not easy to fight Apple’s commercial and financial resources, but it can be done given the right strategy. One tactic of that strategy is to emulate what Apple has achieved in the versatility of their products, and by developing applications for the Kindle, Amazon is doing that: and taking the first step on the road to genuine multimedia capability for the Kindle.

This might conceivably be the beginning of a larger war between the two giants, involving not only eBooks, but also music, movies and all the other miscellaneous applications that have come to be associate with the iPhone and, no doubt, the iPad.

2.  DRM Drop-Out

Amazon made DRM optional for publishers. With iBooks locked by FairPlay, Amazon’s DRM opt-out means that users can port their eBooks to other e-readers. DRM is now optional for publishers, and while that is not a great advance for the majority of Kindle owners, it is for the smaller publishers who will now have more of an incentive to market the Kindle. It is one more in the eye for Apple, and another small advantage that Amazon is trying to gain over the iPad. According to the article “An Introduction to Popular E-book File Formats“, with its own Digital Rights Management structure AZW format protects the e-book publishers and authors from possible piracy and is loosely based on Mobipocket’s popular MOBI file format (Digital Book Readers).

3.  Price Maintenance

Amazon took steps to protect the low prices of Kindle eBooks by maintaining a maximum price of .99 on all its publications. It is the only e-reader that does not allow publishers to apply higher pricing, and it responded to Macmillan’s pressure by removing all that publishers products from its virtual library. Yes, Amazon has stated that these will be reinstated, but that has yet to happen, and Macmillan meantime has been subject to insults from Amazon on public forums.

This move was likely made in response to criticism that eBooks are too expensive in relation to their production costs and overheads. By sustaining a price ceiling of .99, Amazons maintains a level of competitiveness that other e-readers will find it hard to match, including Apple.

4. Touchco Acquisition

Each of the above three will have an influence on the outcome of the bout between Amazon and Apple, but much more significant is Amazon’s acquisition of Touchco, the e-paper and touchscreen technology firm. This appears to be Amazon’s ace in the hole, and the acquisition must have come as shock and a blow to Apple.

Touchco had been working on a true multi-touch screen to work with e-paper that enables unlimited simultaneous touches to be detected. Combined with the Mirasol multi-color technology on e-paper, this offers Amazon the ability to create a multi-touch color tablet device that could very easily not only compete with the iPad, but also exceed its technological capability. It is definitely a big one in Apple’s eye, and the gloves are definitely off now.

The acquisition took place very secretively and quietly, and nobody had an inclination of what was going on.  It is hard to believe that Apple was unaware of it, but it sure seems that way. Round 1 might have been Apple’s, but Amazon has certainly won rounds 2, 3 and 4, although knowing Apple’s resilience and resources, certainly not with knockout blows.

The Touchco technology might have been used with e-paper to develop cell phones, music players and a whole host of possible applications, but that is now lost in Amazon’s fight with Apple for the e-reader market. Sometimes it is time for corporations to focus on their core business, because this type of infighting almost invariably ends up with no winners and the public the losers.

However, what can we look for in the near future?  Likely an expansion of the Kindle, or a variant, as an iPad competitor, and almost certainly the demise of the clunky E Ink and the development of a sleeker display medium. Watch this space and get ready for round 5, because Apple will certainly not take this lying down!