Amazon kindles sales for digital books

Donald Graham, chief executive of The Washington Post Co., travels almost every week and says he hardly ever leaves home without his Kindle digital book reader from Seattle's Amazon.com Inc.

"I have found it to be a very easy way to read," said Graham, 63, who recently read Steve Coll's "The Bin Ladens" on the black, white and gray screen and uses the device to access Kindle editions of the company's Newsweek and Slate publications.

"I read a lot of books on flights and on downtime. I've got a bad shoulder, and it can add a lot of weight to your suitcase."

Graham and business magnate Martha Stewart, 66, are fans of the 10-ounce device, which receives material over the Sprint Nextel Corp. wireless phone network from Amazon's Kindle store.

Books sold via Kindle cost less than paper ones, with The New York Times best-sellers priced at $9.99 or less, said Ian Freed, an Amazon vice president.

"I'm totally hooked," television host Stewart told Amazon Chief Executive Jeff Bezos on a recent show. She said she peruses The Wall Street Journal on her Kindle, takes the reader on vacation and uses it to find recipes when cooking at friends' homes.

By 2010, Amazon may get 3 percent, or $741 million, of its revenue from sales of the paperback-sized reader and digital books, according to Citigroup Inc. analyst Mark Mahaney, a Kindle user. That's up from this year's 0.3 percent, or $60 million, he said.

The Web retailer cut the price of the Kindle, which Newsweek magazine called the iPod of books, to $359 from $399 in May. Amazon initially sold out of the white, 7.5-by-5.3-inch reader within 5 1/2 hours of its November release, Freed said.

The retailer sold 25,000 to 50,000 devices during the first three months of 2008, according to an estimate by Mitchell. Amazon doesn't disclose Kindle figures, Freed said.

Sales of e-books may rise 30 percent annually to $1.3 billion, or 5 percent of U.S. consumer book spending, in 2012, from $340 million, or 1.5 percent of the market, in 2007, according to PricewaterhouseCoopers. The Kindle and the competing $299.99 Sony Reader will boost growth that's being fed by digital offerings from publishers such as Bertelsmann AG's Random House and CBS Corp.'s Simon & Schuster units, Pricewaterhouse said.

"It's reasonable to assume books will go the way of music or the DVD at some point, with the majority being sold digitally," Mahaney said. "The publisher can win, the online distributor may win. It would be the retailer who would lose."

Amazon's digital push comes as traditional U.S. booksellers such as Borders Group Inc. and Barnes & Noble Inc. are grappling with weakening consumer spending and online competitors.

Simon & Schuster plans to make 5,000 electronic books available for the Kindle by year-end, doubling its offerings, said Ellie Hirschhorn, the publisher's chief digital officer. The company's e-book sales will probably rise 40 percent this year, she said.

News Corp.'s HarperCollins is making more than 90 percent of new publications available digitally as they're released in hard-copy form, said Ana Maria Allessi, a vice president overseeing digital and audio books.

The digital versions are encrypted to prevent them from being shared illegally online, she said.

"We've benefited from learning from some of the mistakes in the music industry," said Allessi, who said she reads manuscripts on her Kindle and uses it every day. "The key distinction is it's easy to shop and load and read."

While analyst Mahaney is a Kindle fan, he says the device has some flaws. It doesn't number pages, pictures are grainy, the keyboard is "slow and clunky" and not enough books are available, he said.

Amazon offers more than 130,000 books for Kindle, up from the 90,000 initially on sale, and will make improvements over time, Freed said.

The paper edition of "Sail" by James Patterson and Howard Roughan, a New York Times best-seller, sells for $16.79 on Amazon.com, while the Kindle version costs $9.99. Customers don't pay extra for download time. Users can also transfer text documents and MP3 music files from their computers, according to Amazon's Web site.

"It's probably the best device for e-book readers to come along," said Jim Milliot, business and news director at Publishers Weekly in New York. "It's one more step in creating a viable e-book business."