Apple Inc. (AAPL), Amazon.com, Inc. (AMZN): Who Will Win the E-Textbook Race?

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Each day in America from August to May, children are walking the halls of schools with backpacks filled with textbooks. Despite the fact that many adults now do most of our reading on electronic devices, schools are still reliant on paper and ink, often at a cost of hundreds of dollars per student, per year.

All of this is not so good for the environment, as former governor Arnold Schwarzenegger once noted. His initiative to replace school textbooks with e-books had many rethinking the traditional concept of schoolbooks. But the concept isn't without its flaws – not all students would have easy access to electronic devices and rented e-readers could easily become lost or stolen.

Apple Inc. (NASDAQ:AAPL)

Tech Steps Up

Still, the idea is enough to have Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) taking note...and falling behind a small start-up out of California. CourseSmart specializes in providing electronic textbooks to schools. It's a business model of which Amazon.com, Inc. (NASDAQ:AMZN) has taken note, marketing its Kindle DX as a great classroom solution. Retailing for around $300, the DX may still be out of range for some students, but it's important to note that children with devices like the ever-popular Kindle Fire can access textbooks on their existing devices.

Amazon.com, Inc. (NASDAQ:AMZN)'s e-books segment is growing at a rapid pace, with CEO Jeff Bezos announcing the company's e-book category was up 70 percent in 2012. Amazon.com, Inc. (NASDAQ:AMZN) is a natural home for e-textbooks, serving as home to the electronic version almost every other book published in the past century or so. Still, e-textbooks is a concept that has so far been focused on college students more than those in primary school, since college students can read books via the Kindle app on laptops, iPads, Kindles and even smartphones.

Apple Inc. (NASDAQ:AAPL) Takes Its Bite

Speaking of the iPad, Apple Inc. (NASDAQ:AAPL) isn't shying away from the action. The company's iBooks Textbooks for the iPad focuses on interactivity, incorporating vibrant images and the ability to manipulate objects on a page. Apple Inc. (NASDAQ:AAPL) features textbooks from big-name publishers like Houghton Mifflin Harcourt, McGraw-Hill Education and Pearson.

While the iPad is outside of many primary school students' budgets, parents are purchasing the device – especially its more affordable mini version – for young children. Apple Inc. (NASDAQ:AAPL) is making serious strides in the battle to steal some of Amazon.com, Inc. (NASDAQ:AMZN)'s Kindle customers, with Apple announcing in October 2012 that 400 million e-books had been sold through the iBookstore. Amazon is deliberately vague about its e-book sales, but in certain categories, paper books still outpace e-books. Winning the textbook market could propel one of the two companies to the top.

Barnes & Noble, Inc. (NYSE:BKS) Lagging Behind

With the closure of many of its stores, Barnes & Noble, Inc. (NYSE:BKS) needs a boost from its Nook device. Unfortunately, the company is losing money on the e-reader – a loss so dismal that its CEO is considering buying the retail chain and web side of the business, leaving Nook and its associated e-books out in the cold. It's a move that has many predicting the death of the Nook device, which will have a hard time competing with Amazon and Apple.

Through Nook Study, the company offers students the ability to purchase e-textbooks at a discount. The big challenge is offering a wide variety of textbooks to cover the educational needs of students from primary school through college. For that, Barnes & Noble needs a big player...like Microsoft. The company's rumored purchase of Barnes & Noble's Nook may be just the thing education needs to start a true war for education budgets nationwide.

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