Kindle 2 more competitive with smartphones but not yet available on them

“One of the most successful devices that gets all three is the Kindle e-book reader from Amazon,” Lao said. “You don’t sign a contract. When you buy the book, it’s set up in the background so it’s downloaded wirelessly — that connection piece is in the background. You buy the book just like in a store. A portion of that goes to the carrier operator, and that takes care of the backend, so it’s seamless to the consumer, who doesn’t know they have Sprint. They don’t care, and that is the way it should be for that particular kind of product.”

As a new market, and one that requires consumers to purchase an additional device, predictions for its success are mixed. Barclays Capital estimates the Kindle could generate $3.7 billion in revenue and $840 million in gross profit in 2012, driven by its predicted success in the education market, where it could lower the overall cost of books for students and improve accessibility while also preserving profits for the publishers and authors. Barclays estimates more than 1 million Kindles will find their way to college campuses in 2012. Sanford Bernstein & Co., on the other hand, said the Kindle will remain a niche product and predicts Amazon will sell only 750,000 units this year.

Niche or not, the predictions are good news for Sprint. Last week, Citigroup analysts estimated that Amazon has sold 500,000 Kindles, outdoing Citi’s original projections, although unconfirmed by Amazon. For Sprint, this potentially means hundreds of thousands of new subscribers. According to Citi, Sprint added 210,000 wholesale subscribers in the third quarter of 2008 and posted similar numbers during the first and second quarters. At the same time, Amazon reportedly sold out of its Kindle supply by mid-November. Sprint hasn’t announced details of its business relationship with Amazon, but the carrier stands to gain significant incremental revenues from Kindle users on the EV-DO network. Citi predicts that that Amazon’s annual Kindle sales will grow to $1.2 billion in 2010.