Amazon: Heads I win, tails I win

Investor Place has published a summary of a survey from ChangeWave Research that says that iPad owners as a percentage of all eBook reader owners it surveyed have doubled from 16% in August 2010 to 32% in November, while the percentage saying that it owns Amazon Kindles has declined from 62% to 47% in the same period. The simple way to read this is that the iPad is growing rapidly and stealing overall market share for eBook readers from the Kindle, but it's not the whole story.

It's not surprising that the Kindle's market share is declining overall, and will decline further in 2011 as Android tablets that actually work well as tablets, rather than overgrown smartphones, reach the market. (Given that Amazon is widely rumored to be working on its own Android tablet, that might be a shift it encourages, especially if it makes more money per unit on its tablets than its Kindles.) There's no doubt that the iPad is outselling the Kindle, and every iPad can be used as an eBook reader.

Elsewhere in the survey, ChangeWave asked people who don't already own eBook readers but plan to buy one in the next 90 days which one they prefer. 42% of respondents chose the iPad, while 33% chose the Kindle. It's not great for Amazon, but not disastrous, either. In addition, one question that the survey leaves out is what software iPad owners are using to read eBooks. The chances are that a majority of them are using Amazon's Kindle reader on the iPad as one of their eBook reader applications, if not the primary one.

That's where Amazon wins either way: If a customer purchases a Kindle, they're locked into the Amazon eBook ecosystem, and Amazon makes money on both the hardware and eBooks. Even if a customer purchases an iPad, Amazon still makes money so long as the customer installs the free Kindle reader and purchases eBooks from Amazon. So, just because the Kindle's overall market share is declining, it doesn't necessarily mean that it's bad news for Amazon.

Is rapid proliferation of Android handsets doing more harm than good?

As you may have heard, Verizon and Motorola are planning to launch the Android-based Droid X on June 23rd, the day before the iPhone 4 goes on sale in retail stores. Last month, Sprint and HTC released the EVO 4G, and Verizon and HTC released the Droid Incredible not long before that. Android handset manufacturers are rapidly pushing the "state of the art", but are they pushing it too fast?

Consider the buying decision from a consumer's point of view, comparing the Android and iPhone situations:

• iPhone: Apple releases a new iPhone once a year, so depending on when I buy my iPhone, I can avoid "buyer's remorse" for as long as a year. Also, Apple updates the operating system, so I can take advantage of the new features in the latest version of iOS as soon as Apple releases it.
• Android: Should I buy an Android phone now or wait for the better model that's coming next month? Since my service provider controls Android upgrades, will I get the new version of Android, and if so, when?

For risk-averse buyers, both the iPhone and BlackBerry present safer alternatives to Android. How can Google and its Android partners get around this problem?

• Move to once-a-year major Android updates. Google's Andy Rubin has already said that the company plans to do this.
• Time new handset releases to coincide with new Android releases. That way, consumers will see all the new handset options at one time.
• Get service providers to push new Android releases out day-and-date with Google's official release, so that there's no question as to when, and whether, an Android phone will get a new release. (If an existing phone isn't compatible with the new release, both Google and the service provider should publicize that fact in plenty of time for phone owners to upgrade to a new model if they choose.)