Will Amazon's Kindle Reader Catch On?

April 3, 2009 8:49AM

(bettertrades) - Print media is going by the wayside. That fact is no more evident than in the Amazon Kindle, an electronic reader striving to replace the age-old physical hard or soft cover book that has been a part of civilization for thousands of years.

The Kindle downloads e-books over Amazon Whispernet where the user can then read content on its electronic paper display. Apple's iPhone has an application supporting it called the "Kindle for iPhone" as does the iPod.

Amazon's original Kindle, released on November 19, 2007 and sold for $399, met with mostly positive reviews, while its successor has received overwhelming support. The Kindle 2 debuted on February 23, 2009 with a price tag of $359. Users have raved over the Kindle's improvements, including a quicker refresh period (EVDO/CDMA AnyData wireless modem), longer battery life (3.7V, 1530mAh lithium polymer), sleeker design (10.2 oz, 0.36 inch thickness), and text-to-speech availability.

Wall Street has been reticent to jump on board with Amazon's venture into the e-book forum. Back on November 6th, 2008, Citigroup analyst Mark Mahaney sent Amazon's shares down 7% intraday after downgrading the company, saying Kindle sales wouldn't show up on the balance sheet until 2010. As of April 3, Amazon is trading above $76/share. From December of 2008 to early April, Amazon shares have outperformed the market by close to 60%.

Granted, the Kindle has and will make up a paltry percentage of Amazon's revenues near-term. But analysts are beginning to appreciate innovation occurring at Amazon, not dissimilar to how the Street views tech-darling Apple. On March 9th, 2009, Piper Jaffray analyst Gene Munster upgraded Amazon to "buy" from "neutral", noting that he was playing catch up to account for the company's pioneering Kindle undertaking.

The Kindle has not been without its criticisms. Because the Kindle is in essence a one-trick pony, existing devices may render the Kindle obsolete if apps are developed to encompass its e-book function along with existing music, video, cell, and PDA tasks. Other critics have questioned why Amazon decided to remove the memory expansion slot and the unavailability of WiFi, both of which effectively limit its compatibility and functionality.

While e-book readers are not new to the market, Amazon's Kindle has clearly garnered the most attention due to its ease of use as it relates to reading the screen as one would read a printed book. Sony's PRS-700BC Reader and Bookeen's Cybook Gen3 will be put to the test by Amazon's latest gadget.