Amazon Is Said to Buy Touch-Screen Company
In a sign that Amazon wants to upgrade its Kindle e-reader to compete head-on with the Apple iPad, Amazon has acquired Touchco, a New York-based start-up specializing in touch-screen technology, a person briefed on the deal said Wednesday.
Context & Ripple Effects
Amazon enters this story with the Kindle riding real momentum: customers bought more e-books than physical books for the first time ever on Christmas Day 2009, and fourth-quarter sales rose 42% to $9.5 billion. But within days of those results, Amazon capitulated to Macmillan in the e-book pricing dispute, agreeing to sell at the publisher's prices — surrendering the price lever that had made the $9.99 Kindle book a selling point.
The reported acquisition of Touchco, a New York touch-screen start-up, reads as a pivot from pricing to hardware. Per a person briefed on the deal, the aim is upgrading the Kindle to compete head-on with the Apple iPad; Bits ran the same report under the pointed headline 'Is Amazon Building a Superkindle?' The deal is unconfirmed, but it lands exactly where Amazon just lost ground — if publishers set book prices, the device experience is the differentiator Amazon still controls.
First-order effects
- If confirmed, Touchco's team and touch-screen intellectual property move inside Amazon's Kindle hardware group, giving the e-reader line an in-house path to richer touch input rather than dependence on outside component vendors.
Second-order effects
- Rival e-reader makers face pressure to match a multi-touch Kindle, pulling capacitive touch-screen supply toward e-ink devices just as component demand from tablet makers intensifies.
- Apple's iPad, with its own bookstore ambitions, turns the contest with Amazon into a device-and-storefront fight — where Amazon's reported answer is owning more of the screen technology itself.
Third-order effects
- The deal points toward convergence between single-purpose e-readers and general-purpose tablets: if the Kindle takes on fuller touch interaction, the category boundary blurs and competition shifts to whose content ecosystem owns the glass.
- It also fits a structural pattern of content retailers vertically absorbing input-hardware start-ups, because whoever controls the touch layer controls the storefront the customer sees.
The trend: E-reading is converging with general-purpose tablets, pushing content retailers like Amazon to acquire the input technology that decides whose bookstore owns the screen.