Apple 2.0

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The Kindle kerfuffle - updated

February 1, 2011: 12:35 PM ET

Apple's rejection of a Sony Reader app has analysts leaping to conclusions about Amazon

Source: Sony

[Apple has clarified, sort of. See below.]

Here we go again.

A New York Times story Tuesday quoting a frustrated Sony (SNE) executive has triggered a flurry of similar-sounding headlines:

What got this started? The key passage in the Times story:

"Apple rejected Sony's iPhone application, which would have let people buy and read e-books bought from the Sony Reader Store. Apple told Sony that from now on [emphasis ours], all in-app purchases would have to go through Apple, said Steve Haber, president of Sony's digital reading division."

Sounds like a big policy change, right? But as TechCrunch's MG Siegler points out, book-selling applications -- including Amazon's (AMZN) popular Kindle -- have never been allowed to sell titles from within the app (bypassing Apple's 30% cut). "Instead, Amazon's Kindle app dumps you out onto the web where you have to buy it. So there's absolutely no difference there."

If there is a change in Apple's (AAPL) App Store policy, it is contained in the assertion -- made in the Times story but not attributed to a named source -- that Apple has told some developers that they can "no longer let customers have access to purchases they have made outside the App Store."

That would be a huge change.

The Sony Reader Store never quite caught on, but iPhone and iPad owners have probably purchased tens of thousands of books through Amazon's Kindle store. Revoking their right to read them, as Technologizer's Harry McCracken put it, would be "upsetting, anti-competitive, and self-defeating."

But it's not something Sony has said -- either in its quotes to the Times or on its Reader Store webpage.

McCracken suggests that if there are App Store changes afoot, they might have something to do with the expected arrival of new features that would allow in-store purchases of periodicals like News Corp's (NWS) The Daily, which Rupert Murdoch is scheduled to unveil on Wednesday.

"But I don't think we know enough yet to understand what's going on here," McCracken concludes. "And Apple, as is its wont, declined to comment to the Times -- so it may be a while before it's clear what the implications are. Here's hoping it's all about a misunderstanding rather than a change in policy."

Meanwhile, if anyone cares, there's a Sony Reader app is available here for devices running Google's (GOOG) Android.

UPDATE: Apple has responded with a statement that clarifies the situation and suggests that the NY Times only got the story half right.

"We have not changed our developer terms or guidelines," company spokesperson Trudy Muller told Fortune. "We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase."

In other words, nobody's threatening to deny access to the Kindle books on your iPad and iPhone. But as TechCrunch's Jason Kincaid points out, something has changed. Since September, Apple's developer guidelines have included this sentence:

Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected.

But to interpret that to mean that if Amazon sells iOS customers books on its website it must also sell them as In App purchases is new and problemmatic. Kincaid is betting -- and Apple may be as well -- that given a choice, customers may prefer to buy books from within their Kindle apps, saving them a step while shaving 30% off Amazon profit margin.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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