Amazon Buys Maker Of iPhone E-Book Reader - InformationWeek
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4/27/2009
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Amazon Buys Maker Of iPhone E-Book Reader

Software like Lexcycle's Stanza and Amazon's Kindle iPhone application could drive adoption of electronic books and magazines further by making them available on more than just the Kindle.

Amazon's Kindle 2
(click image for larger view)
Amazon's Kindle 2

Amazon.com on Monday said it bought Lexcycle, maker of the Stanza electronic book reader for the iPhone and the iPod Touch.

The announcement comes almost two months after Amazon introduced a version of the software that powers the retailer's Kindle e-book reader for the same two Apple gadgets. Lexcycle disclosed the acquisition in a short company blog. Financial details were not disclosed.

Software like Lexcycle's Stanza and Amazon's own Kindle iPhone application could drive adoption of electronic books and magazines further by making them available on the millions of devices that Apple has sold to date. While the iPhone and iPod Touch only have 3.5-inch diagonal screens, the display is considered large enough and of sufficient quality to be acceptable for reading.

Stanza is a free application that has had more 1 million downloads and provides access to a variety of online e-books stores, including Barnes & Noble's and some free sources that offer public domain or free content. Lexcycle also offers a desktop version of its software, which allows users to convert Microsoft Word and Adobe Acrobat file formats for reading on the iPhone and iPod Touch.

The acquisition, along with the release of its own iPhone/iPod app, shows that Amazon is more interested in promoting and selling e-books than in dominating the reader device market, Ezra Gottheil, analyst for Technology Business Research, said in an e-mailed commentary. Amazon is eager to drive the growth of e-books, which are far more profitable than traditional books. That's because warehousing and distribution costs are so low.

"TBR believes Amazon will remove direct access to paid e-book distributors, encouraging them to use Amazon for distribution to Stanza," Gottheil said. "The company will likely maintain access to free content, and may even provide distribution facilities, in order to drive e-book growth."

Buying Lexcycle also shows that Amazon believes Apple will eventually sell an iPhone-compatible device with a larger screen that will become popular as an e-book platform, Gottheil said.

"This acquisition is another sign of the increasing importance of e-books, as they supplant most printed books," Gottheil said. "TBR believes e-books will come to dominate the publishing of most types of books, fiction and nonfiction."

Amazon is credited with jump-starting the e-book business with the Kindle, which experts say has been growing in popularity among travelers looking for an alternative to the books and magazines they take on a long flight. While Amazon has not released sales numbers for the Kindle, industry watchers believe the $359 device is too expensive for the mainstream market. Nevertheless, the Kindle is popular enough to account for 10% of the sales of the 230,000 books Amazon sells in electronic format and physical form, according to the retailer.


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