How Can Amazon Outsmart Apple In The eBook War?

You can almost hear the rattle of military vehicles moving into their assigned positions on either side of the battlefield: Guns are being loaded, land mines planted, field hospitals erected … yep, it’s the sounds of the coming eBook War.

With Apple’s iPad set to launch by the end of the month, it seems that Amazon is doing everything it can to make sure that its Kindle e-reader won’t be undersold by publishers working Apple.  According to a recent blog post from The New York Times, Amazon has been trying to get publishers to sign an agreement since Dec. of 2009 that would guarantee that Amazon’s prices would always match or be lower than that of any of its competitors.

The problem for Amazon is that Apple has agreed from the get go that publishers could set their own prices on books, something publishers essentially had to blackmail Amazon into doing.  This may have caused some strain between Amazon and the publishers, but as they are on monthly contracts as opposed to longer term agreements, it must mean things are okay since all of the publishers are now back with them.

So, what can Amazon do to fight off this oncoming attack?  The first thing, and probably most important, is to upgrade the Kindle.  While that won’t help existing owners, it is sure going to make sure that new customers at least give them a second look as opposed to just going, “But the iPad is so shiny and pretty!”

As for making sure current owners don’t drop their current devices and go to pick up an iPad, that is going to be the tougher call to make.  The iPad does so much more than the Kindle, it’s going to be a tough sell to keep your current customers from switching over.  Amazon is definitely going to have to stress the fact that eInk is far easier on the eyes, and they need to just keep pounding away at that point.

After that, it is just going to be your typical retailer-style fights.  There will have to be promotions, maybe some giveaways, perhaps even some sort of loyalty program, but Amazon can not sit back and think, “Well, they bought a Kindle, they won’t switch.”  Yes, some of them will simply based on the fact the iPad has a color screen.

Amazon has had a pretty easy life up until now as no online retailer has ever come close to touching them, but now they are up against Steve Jobs and Apple, and that is not a combination to be taken lightly.  Did anyone really think he could sell tens-of-millions of iPhones in an already crowded cell phone market?  Can anyone explain why iPod owners seem to all own more than just one?  This won’t be an easy fight.

The biggest assets for Amazon in all of this is its tremendous lead time, and they are also a trusted brand, but that just may not be enough this time around.

What do you think?  What can Amazon do to keep its head above water in this oncoming fight?