It's interesting that, since Steve Jobs announced during his iPad keynote that iBooks would be available for download from the App Store, recently there's been some coverage of this as news -- including that the iBooks books will be using Apple's FairPlay DRM.
That iBooks won't be built in like iPod, Music, or Movies apps, and that it includes the iBooks Store inside it instead of in a separate -- also built-in -- app like iTunes Store or App Store, is what made TiPb assume Apple was intending to compete on equal terms with existing App Store apps like Kindle. Making iBooks built in, and making the store part of the iPhone, iPod touch, and iPad would clearly be a sign that Kindle's days in the App Store might be numbered. This way, however, we took it as just the opposite, especially since Jobs went to the trouble of mentioning it.
In terms of FairPlay DRM, while recent media coverage implies that it hasn't been seen since iTunes music went DRM-free in April of last year, iTunes Movies and TV Shows certainly haven't (a point 9to5Mac makes as well), and App Store apps are protected as well. TiPb has always assumed they've been using FairPlay this whole time, since Apple prefers technology they control, especially when they're contractual bound to maintain things like copy protection. (This is why they historically refused to license it to third parties -- it would make it easier to break and harder to re-secure).
So, again, when Jobs announced iBooks Store, we just took it for granted it would be using Apple's DRM system, FairPlay. It nicely sets the stage for a big DRM-free books movement in a few years, doesn't it?