Amazon gets ready for second-generation Kindle

By Edward C. Baig, USA TODAY
Get ready for the next chapter. Tech analysts expect Amazon.com (AMZN) to open the cover on Kindle 2, the second generation of its groundbreaking electronic reader. On Tuesday, Amazon invited members of the media to "an important" news conference Feb. 9 at New York City's Morgan Library & Museum.

Amazon CEO Jeff Bezos is expected to attend. But Amazon won't reveal the plot. "We are not sharing details," Amazon director of communications Drew Herdener wrote in an e-mail. The company has said there will be a new version of Kindle sometime this year.

Paperback-size e-book readers such as the Kindle or rival Sony Reader let bookworms cart a boatload of titles — more than 200 in the case of the first Kindle. But Kindle's real advance was in its wireless Whispernet network (built on top of Sprint's speedy EV-DO wireless network). Readers could search for and sample books, blogs and periodicals (including USA TODAY) right on the device and purchase new content in under a minute. Best sellers typically cost $9.99.

Amazon won't disclose Kindle sales. Mark Mahaney, director of Internet research at Citigroup Investment Research, estimates Amazon sold about 400,000 units last year and that Kindle hardware and book sales will contribute about $1 billion to Amazon's revenue in 2010. "It's pretty clear this is the iPod of the book world," he says. Mahaney also expects the new Kindle to drop to around $300, from $359. Minor design glitches will likely also be addressed. Pundits have criticized Kindle for its clumsy button layout and homely appearance.

Amazon underestimated demand for the first Kindle, which is still difficult to come by. Amazon's website says Kindle is sold out due to "heavy customer demand." Orders are expected to be shipped in four to six weeks, the website indicates.

What isn't clear, of course, is whether buyers will receive the first Kindle or the sequel. Whatever Amazon trots out, Tim Bajarin, president of the Creative Strategies consulting firm, doesn't expect shortages to be a major issue. "This time they at least know what the sales cycles have looked like," Bajarin says. "I have to believe they're going to be smarter about building and managing inventory."

Amazon stock closed at $48.44 Tuesday, down 2.4%.