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Amazon didn't waste a lot of time answering the challenge of the iPad. The New York Times is reporting this morning that Amazon has acquired Touchco, a touch screen company, and plans to incorporate its engineers into the Kindle division.

It doesn't take a PhD in analysis to figure out that Amazon is threatened by the upcoming release of the iPad and other eBook reader competitors, which already have touch screen versions of their devices. What surprises me, is how quickly Amazon responded to the challenge.

Amazon Had Early Success

Amazon benefited from being a big book seller and being early to market with an electronic book reading device. It also didn't hurt that Oprah gave the Kindle a huge push on her show. With the Winfrey blessing, sales of the Kindle took off, but like many early leaders in technology, while they reveled in early success, competitors crept in. First there was the Sony Reader, then the Nook from Barnes & Noble. The iPad is the biggest threat to date, and even though this announcement is not quite official, it makes all the sense in the world.

Time To Move On

The Kindle can't hope to compete at a high level with these other devices without a touch screen. People expect it, and buttons are just awkward. Amazon's move is not strictly defensive though. It appears that the technology they purchases is considerably cheaper than the type used on the iPad. What's more, the technology can deal with multiple touches. The NYT describes it this way:

The capacitive touch screens used in the iPad and iPhone are considerably more expensive. Unlike those screens, the Touchco screens can also detect an unlimited number of simultaneous touch points.

So it's not just a matter of acquiring any old touch screen company. Amazon has taken it one step further and grabbed a company that can give it something over and above the iPad in terms of functionality.

The Ante is Raised

I think it's interesting that Amazon's Kindle division is located in Cupertino, right in Apple's back yard. It's clear that with this purchase, Amazon is taking it to Apple and raising the stakes. As I wrote just last week in Does iPad Mean Death to Kindle:

Does the iPad mark the death of the Kindle and its competitors? I very much doubt it. I think it probably marks the beginning of a period of healthy competition where these manufacturers respond to Apple and upgrade their features accordingly.

Let the games begin.

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