SystemShock

Amazon.com has reportedly purchased a leading touchscreen innovator in an apparent bid to add more functionality to its Kindle e-book reader. With Apple set to begin shipping its highly anticipated iPad tablet computer in less than two months with an iBooks application and multimedia capability, Amazon is under pressure to keep its share of the market.

Amazon has also announced an application store and this week produced a software development kit for "active content" that includes sample code and a simulator. The company plans to add puzzles, games and travel guides to selections that readers can download.

However, Amazon reportedly will exclude applications that use the Voice over Internet Protocol.

Playing Catch-Up

Some analysts are skeptical that the Kindle can avoid being swamped by the iPad tsunami.

"As always, it depends on what else they add," said Michael Gartenberg, a vice president at Interpret. "Adding touch to the existing Kindle seems gratuitous and actually can work against E Ink legibility."

E Ink, the largest supplier of electronic-paper display technology, currently provides the Kindle's monochrome display.

Gartenberg questioned why the world's leading online retailer would want to compete with hardware giants.

"If the question is, is Amazon thinking of a new generation of devices that can more effectively compete with the iPad, the better question is, should Amazon be in the device business at all [instead of focusing] on adding value to other devices?" he asked.

While the $499 price for the iPad's basic model is almost double the Kindle's $259, it was set lower than the anticipated $700 to compete with the e-reader.

The New York Times reported Thursday that Amazon has purchased Touchco, a company that manufactures a highly sensitive touchscreen that costs only $10 a square foot, far cheaper than the screen used in Apple's devices. The screen has unlimited touch points and is able to distinguish between fingers and pens or styluses.

The Kindle currently relies on a hardware keyboard for data entry.

Multi-Touch Is In

The report is the second in two days about multi-touch capability designed to tackle the iPhone and iPod edge in that realm. On Wednesday, Google announced that its Nexus One smartphone now has a software patch to enable "pinch and zoom" for maps, photos and search results.

The Times said neither Amazon nor Touchco's representative would comment for its report. But citing "a person briefed on the deal," the paper reported that Amazon's hardware facility, Lab 126, will merge with Touchco, which began as a project at New York University's research lab.

Touchco's web site says the company is no longer doing business as of last month.

A forecast in June by Collins Stewart analyst Sandeep Aggarwa predicted that the Kindle would generate $310 million in revenue for Amazon in 2009 and $2 billion a year by 2012, with gross profit reaching $70 million, and $560 million in 2012.

Citigroup analyst Mark Mahaney estimated in October that Amazon would sell 1.5 million Kindles in 2009.

Source: Yahoo! Tech

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