Analyst: Google E-Books Push Will Force Amazon To Drop Prices

Author: Rory Maher

Squali didn’t provide specifics on what those new terms might be, but he did analyze the competitive challenges the two will face as they grow their e-books businesses.
—Search is a key advantage for Google: Squali said Google could use its dominant search engine as a distribution channel that could trigger impulse buys. Google could, for example, easily publish its own sponsored search or paid click listings alongside searches for e-books or relative products.

—Google’s profit margins will likely be higher: By offering an e-books sales-and-delivery service rather than selling an e-reader, Squali believes Google could get higher profit margins from its e-books business than Amazon.

If Squali’s prediction that Amazon will have to drop its price for the Kindle is right, margins would be even lower since the costs of making and distributing the Kindle likely wouldn’t change.

—Several factors will determine the winner: Squali sees three primary factors in deciding who will be the ultimate winner in the e-book battle:

1) whether users gravitate to reading e-books online or on devices;
2) whether users will be satisfied with reading books that are stored on Google’s servers or “own” them on their hard drives; and
3) which company wins the pricing war.