Amazon has introduced a new version of its Kindle application for both the iPad and the iPhone (and iPod) that supports embedded audio and video clips. This move gives Amazon an interesting advantage with publishers wishing to bring to market multimedia enriched books without having to develop their own iOS applications.
It is probably just a question of time before Apple matches this move by adding equivalent features to its own ebook reading application: iBooks. As Amazon and Apple both use different formats for the eBooks they sell through their stores, this means that we will have competing book formats which might be evolving quickly along different, but perhaps parallel tracks.
One aspect which seems clear is that neither of these companies are going to stand around and wait for publishers to get their act together around a publishing format standard. These companies will push forward competing with one another pushing the limits what is an eBook.