What happens when Apple responds to the Amazon Kindle?

I must say, I’m beginning to admire Henry Blodget for his unabashed willingness to ignore any irony others might see in his analytical posts about Amazon.com, like this one that looks at Citi analyst Mark Mahaney’s report that the Amazon Kindle could be a $750 million iPod-like franchise in a couple of years. … However, I stand by my earlier prediction — and this is where I find a flaw in Mahaney’s analysis: Apple won’t stand still and let Amazon have this market all to itself.

I must say, I’m beginning to admire Henry Blodget for his unabashed willingness to ignore any irony others might see in his analytical posts about Amazon.com, like this one that looks at Citi analyst Mark Mahaney’s report that the Amazon Kindle could be a $750 million iPod-like franchise in a couple of years.

Blodget does not explicitly agree with the prediction, indeed, he points out some holes in the theory. He doesn’t fully repudiate it, however.

I’m clearly not a financial analyst and so any disagreements I may have with Mahaney’s predictions have nothing to do with market-share numbers. I have no idea about the revenues or bottom-line impact of future Kindle developments. However, since some of his analysis is based on his personal experience with the device, I feel I can at least weigh in on that front.

First, let me say I use the Kindle frequently. Not quite daily, but several times a week. My review of the Kindle from last December is still accurate. I haven’t really been surprised by anything about it during the past five months. It’s still a clunky, poorly designed piece of hardware with a ridiculous interface. Yet the EVDO (digital cellular)-powered feature that allows one to instantly purchase books from Amazon for less than $10 is near magic. That price-point for books and the instant download are what make the device work for me — and, apparently, the Citi analyst, also.

However, I stand by my earlier prediction — and this is where I find a flaw in Mahaney’s analysis: Apple won’t stand still and let Amazon have this market all to itself. As I’ve written about ad-naseum, a slightly larger iPod Touch linked to eBooks distributed via the iTunes store would match and raise the game with Amazon. At that point, Amazon would be competing with the iTunes distribution channel, but with Amazon hardware that looks and feels like it was designed in Soviet-era Russia.

Also, with Apple in the game, its eBook format would be readable via the Mac or iPhone, as well. The Kindle format is locked into a Kindle device.

As I wrote last November, I’ll continue to use my Kindle until Apple comes out with something like this (even if it’s not in the next couple of weeks):