Amazon Fights Apple…By Improving the iPad

Amazon is fighting a two-front e-reader war. At the low end of the market, the company is battling with Barnes & Nobles’ (BKS) Nook, Borders’ (BGP) Kobo, Sony’s (SNE) Reader line, etc. And at the other end, there’s Apple’s iPad, which costs much more than the Kindle and does much more, too.

Last week, Amazon fought back against its cheaper rivals with a price cut. And many people expect Jeff Bezos to combat the iPad by reinventing the Kindle, adding color and other features.

Here’s a step: Kindle titles that feature audio and video clips–if you read them on the iPad via Amazon’s Kindle app. The feature also works on the iPhone and iPod touch as well, but not the Kindle itself.

In theory, Amazon (AMZN) shouldn’t care whether its customers read e-books on its device or on Apple’s (AAPL) as long as they’re buying them from Amazon. But it may be a little risky for Bezos to highlight the advantages of his rival’s hardware.

Then again, these are pretty modest advantages, for now: Amazon is launching the feature with a mere 13 titles, and five of them are from travel guide writer Rick Steves. But the Steves guides underscore how useful audio can be in some cases: You can read what he has to say about the Louvre, and now you can listen to him, too.

The video is much cruder–a William Styron book has a glorified slide show, but not much else–which makes sense. There are plenty of books designed to be consumed with companion CDs or MP3s, but very few writers or publishers know what to do with moving images.

Maybe that will change now that they have hardware to play with. But my hunch is that it’s going to take some time for the book industry to get a handle on video. And by that time, perhaps the Kindle will be ready, too.