The arrival of the Kindle at AT&T stores represents more progress in the creeping distribution of Amazon’s popular e-reader. Originally, the Kindle was a 3G-only device powered by Sprint. However, the arrival of Wi-Fi-only competition from Barnes & Noble caused Amazon to respond with its own Wi-Fi-bound Kindle. Since then, far fewer consumers have opted to pay the 3G premium for either device, and Barnes & Noble decided to completely forego a cellular version of its Nook Color “reader’s tablet.” In contrast, category pioneer Sony has fallen behind as its entry-level e-reader, the Pocket Edition, lacks Wi-Fi and relies on PC sideloading.
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Having just returned from my annual Black Friday morning shopping trip I am struggling to suppress a yawn. Not just because I got up at 2:45AM, but because I have to confess, once again, that I just didn’t see anything as I shopped today that either changes my general outlook on the holiday for tech or provides a window into how aggressively consumers may be shopping for electronics. As I said last year, giving away highly-desirable products in limited quantities for outrageously low prices is always going to draw a crowd. However, at some point you begin to bump into the realities of installed bases, low prices, and relevancy. This year’s struggle to determine what the most relevant, most exciting products to sell was especially acute and I believe will lead to lackluster results, similar to what we’ve seen all year.
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Visit Amazon.com’s home page and you’ll learn that the Kindle is the retailer’s best-selling product (even beating out 50″+ rear-projection televisions). That’s not too surprising given the momentum of the category as well as its shipping-friendly dimensions. But the Kindle’s success at Amazon has also been helped by the device being sold exclusively there, whereas Amazon must compete with other retailers for nearly all of its other products.
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One of the open questions surrounding the iPad that has quickly come to the fore in light of the recent Amazon-Macmillan brinksmanship is to what extent the device will jeopardize sales of e-readers. This is particularly true of the market-leading Kindle, upon the metaphorical shoulders of which Steve Jobs said Apple stood.
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To butcher the universal application of an old cliché regarding books and their covers, don’t judge an electronic book market’s profitability by its hardware. The industry has been obsessed with guessing the number of Kindles Amazon has sold, but that doesn’t tell the whole story of the device’s success. Since the Kindle is a $300 vending machine for Amazon, it can be a sustainable venture for the e-tailer even if it never cracks the mass market or achieves market share dominance.
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Consumer Technology, Wireless | Ross Rubin, Executive Director, NPD Connected Intelligence | 
March 3, 2011 12:18 pm | 
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