Amazon's new Kindle e-book reader gets slimmer

[February 10, 2009]  NEW YORK (AP) -- Amazon.com Inc. is releasing a slimmer version of its Kindle electronic reading device, but it still costs $359 -- making it unclear how mainstream even an improved Kindle can be during a brutal recession.

Rather than lowering the price, Amazon touted several upgrades to the e-book reader and a novella from Stephen King that will be available exclusively for the device. The new Kindle is expected to begin shipping Feb. 24, with owners of the first Kindle at the front of the line if they want to upgrade.

"This device is a significant improvement versus the first generation," Amazon CEO and founder Jeff Bezos said in an interview.

He said there was no way to lower the price given the upgraded components in the Kindle 2, which is a bit more than one-third of an inch thick -- about half the thickness of the first Kindle. Its 6-inch screen can display 16 shades of gray, compared with the previous Kindle's four shades. It will be able to read text aloud from two small speakers on the back, and it can store 1,500 books, instead of 200.

The new Kindle is slightly taller, but like the old version, it weighs about 10 ounces. It downloads books -- the catalog has 230,000 titles -- and newspaper stories and blog posts over Sprint Nextel Corp.'s wireless network.

E-books still don't exceed 1 percent of overall book sales, but publishers say they are a fast-growing niche, a rare area of improvement in an otherwise terrible market. Although some publishers have expressed nervousness about Amazon.com's market power, they have supported the Kindle and expanded the number of books available for it and competing devices such as Sony Corp.'s Reader. The Reader costs $300 or $400, depending on the model.

The Kindle has enjoyed a steady buzz, with an endorsement last fall from Oprah Winfrey and Amazon's claim over the holidays that it was out of stock.

Seattle-based Amazon has carefully guarded key details, including how many Kindles have sold since they debuted late in 2007. Amazon wouldn't comment on an analyst report last week that it had sold about 500,000 Kindles, which was based on a regulatory filing by Sprint Nextel that indicated 210,000 were bought in the third quarter of 2008.

Sony spokeswoman Valerie Motis said that since the original Reader's launch in October 2006, the company had shipped 300,000 of the devices as of the end of November.

Bezos said Monday that Kindle orders were strong around the holidays and that he expects that to continue. Even in the recession, he said, "people are buying Kindles."

The Kindle is available only in the U.S.; Bezos said an international release is "clearly something we're thinking about."

Ross Rubin, an analyst with The NPD Group, called the Kindle 2 "an improvement across the board." He said that there was enough room for improvement over the first Kindle that the second probably will still appeal to people who already have one.

But for e-book readers to reach broader audiences, the price needs to come down, he said. He expects this won't happen until must-haves like textbooks become available for the devices.

Colin Sebastian, an analyst with Lazard Capital Markets, said Amazon could cut the Kindle's price before the next holiday season if sales are healthy enough that Amazon can save on some component costs. He noted that driving down the price could lead to more sales of books for the Kindle -- and books are more profitable than the device itself, he said.

Amazon recently said it would make Kindle e-books available on other kinds of devices, including cell phones, as rival Google Inc. also is doing.

Amazon also hopes to make the Kindle enticing through exclusive content, beginning with King's novella, called "Ur," which incorporates the device into the story.

King has been known as a digital publishing innovator. In 2000 he released a novella, "Riding the Bullet," as a free download. Web sites such as Amazon and Barnes & Noble.com were swamped by high demand for the 66-page story.

Amazon shares rose 16 cents to close at $66.71.

[Associated Press; By RACHEL METZ]

AP National Writer Hillel Italie contributed to this report.

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