Can Amazon's Kindle light a fire under the e-book market?

SAN FRANCISCO — Amazon.com introduced a new portable reading device Monday that the online retail giant hopes will finally spark demand for electronic books.

The device, known as the Kindle, represents the company's first foray into the tech hardware market and is already drawing comparisons to the iPod, the portable digital-music player from Apple that has almost single-handedly revolutionized the music industry. But the device also has its limitations, which include a high price and the inability of users to add electronic versions of books they already own.

"It's consistent with Amazon's vision to be a leading distributor of digital content," said Colin Sebastian of Lazard Capital Markets. "Books are right in their sweet spot. They've just been waiting for the technology to catch up."

Earlier this year, Amazon launched online services offering digital music, TV shows and movies for download.

None of those offerings will be available on the Kindle. The device is designed exclusively for downloading and reading books in digital format, or e-books, as they are called. But like the iPod, the Kindle will be backed by a large online store through which users can purchase and download e-books at prices well below the existing cost of many physical books.

The Kindle Store on Amazon's Web site offers New York Times best-sellers and other new releases for $9.99 each — though many older titles cost less — while the Kindle itself costs $399.

The company said it currently has 90,000 books available in the e-book format, as well as several newspapers, magazines and blogs.

"The problem with e-books up to now is that they are not comfortable to read," Amazon CEO Jeff Bezos said in an interview. "We wanted to make a device with a seamless, integrated service."

The device weighs a little more than 10 ounces and is about the size of a paperback book. Amazon said each Kindle can hold more than 200 books in its built-in memory and more with add-on memory.

In addition, users can "back up" books they have purchased online with Amazon, so they don't have to keep the title on the device.

"We wanted to go beyond the physical book," Bezos said.

The Kindle is also enabled with a wireless connection, though users will not have to set up any sort of access plan with wireless carriers. The device works through the data network operated by Sprint, upon which Amazon built its own service called Whispernet. Through this service, the company covers the charges associated with downloading books and perusing the Web.

Users can purchase and download books through the Amazon store using the Kindle. At an event in New York City on Monday to introduce the device, Bezos downloaded a 1,000-page book in less than a minute.

The Kindle is expensive compared with other e-book-reading devices. A similar device from Sony costs about $279.

Bezos said the premium price is reflected in the Kindle's capabilities — in particular in its wireless connection. "This is the same technology you'll find in a 3G phone, so we think it's a great value at $399," he said.

In addition, each device comes with its own e-mail address, which customers can use to e-mail personal documents to the Kindle for reading later.

Analyst Scott Devitt of Stifel Nicolaus says that while the initial version of the Kindle has some drawbacks, the company could see some significant advantages with the device over the long term.

"The product will improve, its price point will drop, and the addressable market will expand, in our view," said Devitt in a note to clients. "With time, we believe Amazon Kindle could be Amazon.com's Trojan horse into a complete 'always on' connection to all Amazon offerings."

Electronic book sales climbed 24 percent in 2006 to $54 million, according to the Association of American Publishers. They comprised less than 1 percent of the $24.2 billion in sales for U.S. publishers last year.

Industry players say that while e-books have gained popularity in educational circles and other niches, mainstream consumers have been reluctant to adopt the new technology because they want it to replicate the experience of physically handling a book.

Both Amazon and Sony are working to overcome this hurdle. The two companies use technology by Cambridge, Mass.-based startup E Ink, which makes "electronic paper" designed to reflect light like physical printed paper. The displays on the digital readers don't require backlights and are meant to reduce eyestrain and glare.

Information from Bloomberg News and the Chicago Tribune is included in this report.