Amazon earlier this month introduced “Kindle for iPhone and iPod touch,” a new application available for free from Apple's App Store that lets customers enjoy over 240 thousand books on the iPhone and iPod touch using Apple's multi-touch user interface. According to Technology Business Research market research and consulting company, the app dramatically changes the whole book publishing industry.

For Apple and Amazon, the new reader application is a win-win. The reader makes Apple’s products more capable and therefore more attractive. Apple users with a Kindle gain a more portable alternative reader. Users without a Kindle gain access to more than 240 thousand ebooks, downloadable through the browser. Amazon gains a larger audience for Kindle ebooks of 25 million, more than 18 million iPhone users and an estimated 7 million iPod touch users. While Amazon will lose some potential Kindle sales among iPhone and iPod touch owners, it will also gain sales to Apple users who first build a library and then want the larger device. The iPhone and iPod touch are adequate platforms for reading, but their small screen size limits them.

TBR believes Apple will introduce a device similar to an upsized iPod touch to address the market, and to offer an alternative to netbooks.

The broader impact of the announcement will come from Amazon’s introduction of readers on other platforms over time.  TBR believes Amazon has chosen to aim for more sales of ebooks instead of sales of its proprietary device.

“We are actively working on making Kindle books available on a wide range of devices, but we are not disclosing specifics at this time,” Cinthia Portugal, a spokeswoman for Amazon, confirmed recently.

TBR believes Amazon is developing readers for PCs, including netbooks, and for other portable devices with large enough screens. Amazon’s key development objective is providing strong enough digital rights management (DRM) to make it difficult for purchasers to share books with other people. Without strong DRM, publishers will not publish on the Kindle system. With strong DRM, Kindle’s expanded market will attract more publishers, and the available library will grow, which will, in turn, further expand the market.

With readers available for multi-function devices, the entry cost for Kindle ebooks will drop dramatically, driving faster growth in ebook sales. Because of their lower cost, portability, and immediate availability, TBR believes ebooks will take over much of the current market for books. Even with the steep $369 entry cost, the Kindle is very popular. Amazon sold out of the original market before the 4Q08 holiday season.

TBR believes the availability of ebooks will increase the market for portable devices that can support readers, including netbooks, large screen handsets, and tablets. These will all be multi-function devices incorporating Web browsers, email, and other applications. The lower cost of the ebooks, when compared with traditional books, will often offset the cost of the devices. It is likely that some school districts will choose to buy devices with readers and ebooks in preference to traditional textbooks.

Ebooks will not supplant books purchased as objects, but they will largely replace books purchased for their content. These include novels, general non-fiction, textbooks and reference books, and TBR believes they constitute the substantial majority of books sold.

Tags: Amazon, Apple, iPod, iPhone, Kindle