Amazon Kindle

Citigroup said on Monday that Amazon.com's (NASDAQ: AMZN) Kindle electronic book reader appears to be selling much better than expected and could double a previous estimate for units sold this year, sending shares in the online retailer up 9 percent.

With few cool new gadgets expected on the market, the Kindle could be one of the top electronics gifts of the upcoming holiday season, along with Apple's (NASDAQ: AAPL) newest iPhone, Citigroup (NYSE: C) said.

"Turns out the Kindle is becoming the iPod of the book world," Citigroup analyst Mark Mahaney wrote in a note to clients. He kept a "buy" rating on the share.

Mahaney estimates Amazon will sell up to 380,000 Kindles in 2008, up from a previous forecast of 190,000, noting that adoption rate would be similar to the first year of sales for Apple's media-playing iPod.

He sees Amazon selling up to 150,000 Kindles in the fourth quarter alone.

Mahaney also expects Kindle and related revenue of more than $1 billion by 2010, compared with a previous view of $400 million to $750 million.

Amazon introduced the Kindle in November.

According to Amazon, the company has not suffered any drop-off in traditional book purchases due to the Kindle's popularity. The device's wireless connectivity is the device's big key innovative feature, Forrester analyst James McQuivey has said.

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At the company's annual shareholder meeting in May, CEO Jeff Bezos expressed a commitment to the Kindle's long-term development.

"One of our competitive advantages at Amazon is that we are willing to plant seeds -- if we think the seed is important -- and nurture it for a long time," Bezos said.

"Everything worthwhile that we've done, we've had to invest in for some number of years, so I doubt this will be any different," he added.

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