AT&T Retail Stores Will Sell Amazon's Kindle 3G

AT&T said Monday that it will sell Amazon.com's Kindle 3G for $189 at more than 2,000 AT&T retail stores across the U.S., beginning March 6. The wireless device already uses AT&T's nationwide network to process e-book downloads and related user activities.

Since Amazon's profits come from selling e-books and other digital publications rather than the Kindle itself, any expansion in retail availability ultimately furthers the online retail giant's profit goals. Although the Kindle is already offered by other U.S. retail outlets such as Best Buy, Staples and Target, Amazon's deal with AT&T represents its first foray into the U.S. wireless space.

"As the first dedicated e-reader offered in our stores, we are confident the Kindle will be an attractive addition to our in-store connected-devices lineup," said AT&T President of Emerging Devices Glenn Lurie.

Competing for Attention

According to IDC, Amazon was the e-reader market leader in the third quarter of 2010 with more than 1.1 million units shipped, which was good enough to grab a global market share of 41.5 percent. Overall, global e-reader shipments increased 40 percent year over year to 2.7 million units in last year's third quarter -- with the U.S. representing nearly 75 percent of the e-reader market worldwide.

What's more, the research firm's analysts estimate that 10.8 million e-reader devices shipped worldwide in all of 2010. Still, global e-reader sales pale by comparison to what's expected to happen in the web tablet market this year.

IDC expects tablet makers to ship 44.6 million units in 2011, with the U.S. representing nearly 40 percent of the total. The danger for the e-reader makers is that their devices will eventually be overshadowed by the next wave of lower-cost tablets sporting a wider range of innovative features.

The biggest potential threat to Amazon's Kindle is Apple's widely anticipated iPad 2, which will also be offered by AT&T when it launches later this year. By gaining a place on AT&T's store shelves, Amazon now has an opportunity to directly compete for the attention of AT&T's 95.5 million subscribers.

No Real Innovation Yet

When it comes to capturing consumer attention through the introduction of media-savvy features, however, Amazon and the world's other top e-reader makers still have a long way to go. For example, Barnes & Noble originally envisioned the nook's book-sharing feature as a way to tap into the popularity of social networking, but the concept never caught on, noted Forrester Research Vice President James McQuivey.

"It comes with so many strings attached that it has failed to spawn the real innovation that the market is capable of," McQuivey explained. Moreover, Amazon's own limited foray into the social-networking space simply tries "to make do with what it has," he added.

Though the new Public Notes feature built into Amazon's latest Kindle 3.1 software "can't share content, it can at least share people's comments and interactions with content, which nobody technically owns -- except the user, who agrees to share this information," McQuivey said. "It's a smart way around the problem and it will catch on, especially as famous and influential people start attracting 'followers' who want to read their notes and hear their reactions to a beloved or intriguing book."

Still, the early prediction by McQuivey that e-reading devices would open a Pandora's Box in the social space hasn't come to pass. "I don't think we're there yet," McQuivey said.