How Kindle will compete with the iPad

    Although Amazon's (AMZN) Kindle has the largest share of the U.S. e-reader market -- 62%, according to a ChangeWave survey conducted in early May -- the iPad is gaining fast.

    In the same survey -- fielded only a month or so after the iPad went on sale, Apple's (AAPL) tablet computer was already in the hands of 16% of the 245 respondents who said they owned an e-reader.

    Moreover, reading books is only one of a dozen things people are doing with their iPads, from surfing the Web and checking e-mail to running apps and watching videos. How can the Kindle compete?

    A shareholder put the question to Amazon CEO Jeff Bezos, and Bezos had a ready answer:

    "The Kindle will compete with these LCD devices like the iPad by being a very focused product," he said. "Serious readers are going to want a purpose-built device, because it's an important activity for them."

    It's like the difference between a camera built into a cell phone and a stand-alone camera, he said. "If an activity is important, you get dedicated devices."

    The black-and-white Kindle may look like an iPad designed by the Amish, as one wag put it, but for reading books it does have many advantages, among them:

    • Readability. E-ink is easier on the eyes that LCD screens, especially in bright sunlight.

    • Lighter. 10.2 ounces vs. 1.5 pounds.

    • Longer battery life. 1 week vs. 10 hours.

    • Less expensive. From $259 to $489 vs. $499 to $829.

    • Cheaper connectivity. Free 3G wireless vs. 3G for $15 to $30 per month (or free Wi-Fi).

    A color Kindle is some ways off, Bezos said.

    But at the right price point -- maybe $150 -- his plain Amish black-and-while Kindle should do just fine.