I said most of what needed to be said about Amazon’s Kindle in the posting
One Million Users: Is Stanza Killing The Kindle? I’ll reiterate some of what I wrote then, but I’ll add to it. There are 2 points:

1) The Kindle is, by design and by definition, a niche device.

Amazon may have had the idea that it could launch a compelling pervasive substitute for a book, but it was wrong. It might have the best possible display and the best possible interface for reading a book, but if you already have an iPhone and/or a netbook, why do you want to carry a Kindle around with you. It’s a device too far. You’d have to be an aficionado of some kind to want a Kindle and the aficionado market is not big enough to get the volume.

The Kindle never started life as a niche device, it just got pushed into a niche by the iPhone and it was going to get further isolated as the netbook market produced better devices. So Amazon is now in a difficult position in one respect. The Kindle isn’t going to sell in the tens of millions. Not now. Not ever. Whether the true market for the Kindle is big enough for Amazon to want to keep it alive is difficult to know. That’s all about the numbers.

It could sell a much larger volume if it sold the Kindle from book stores, but which book store would ever carry the device? That’s part of the problem. None of the natural retail outlets for the Kindle will touch it.

2) The big danger to Amazon was that Stanza (or some other program) would become a real Amazon competitor.

In a few months Stanza, the dominant iPhone book reading app, achieved a million downloads. That must have made Jeff Bezos go white. A relatively simple piece of software dashed past the Kindle and opened up the prospect of a competitor to Amazon in the electronic books market. It had already rolled up an inventory of 100,000 books.

To its credit, Amazon struck back as fast as it could. It introduced its own Kindle app for the iPhone by the beginning of March, in effect admitting that the Kindle was now trapped in a niche. I’ve no idea when Amazon opened up negotiations with Lexcycle (the Stanza company) but I suspect it watched the downloads of its Kindle app for a few weeks and then made the phone call. Better to buy Lexcycle out before it got too big.

Is The Kindle Toast?

So Amazon is now the gorilla in the iPhone book reading market. Good for Amazon. Nicely executed. Amazon is not going to have to face some energetic little start-up that might give it a run for its money. Take out handkerchief. Wipe brow. Phew!

Or maybe not. What if Apple is about to launch its not-a-netbook-netbook, a media pad that plays video and games and music and is a low end lap top. Why wouldn’t Apple set up it’s own electronic book store. It could. If it did the Kindle would be toast and Amazon would be challenged.