Amazon.com Inc. has received a lot of attention and respectable sales for its Kindle e-book reader, but it's hardly made a dent in the hardcover armor of the old-fashioned paper book.

On Wednesday, the Internet company revealed another prong of its strategy in making its gigantic e-book library available on a device already in millions of hands: the iPhone.

This is a big step for e-books, which have lingered outside the mainstream for nearly two decades even as digital media have conquered music and film distribution. Amazon's move combines a readily available device that's suitable for reading with a good distribution system and reasonably priced books.

That said, the first version of the iPhone application is crude, and Amazon would do well to release a software update soon to demonstrate its commitment to the iPhone.

But before we get into that, let's take a look at how the Kindle app works. It's free, available in Apple Inc. (nasdaq: AAPL - news - people )'s App Store for U.S. residents. Amazon says it's working on taking it international, though I wouldn't hold my breath because that would involve securing international publishing rights. Apart from the iPhone, it will also work on the iPod Touch.

Once you've loaded the app, you can buy books on Amazon's Web store. You'll have to use either a computer or the iPhone's browser. Unlike some other e-book readers, including the Kindle, the app doesn't have a built-in store. Considering that most people are familiar with the Web site, this isn't a major shortcoming.

New books cost a few dollars less than the print versions, and some public-domain books are available for 99 cents.

Tap one, and its text fills the screen. Turn the page by swiping over it with your finger. If you do something else with your phone, then return to the reader app, it will show you the last page you were reading, so there's no need to fiddle with bookmarks or bend page corners.

That's great for reading short snatches here and there. Whip your iPhone out in the elevator, and your co-travellers won't know that you're ignoring them in the best way by catching up on Danielle Steel. You won't look like a snob in the supermarket checkout line, even if you're reading Stendhal's "The Charterhouse of Parma."

Since the screen is backlit, you don't need a light source.

If you've already bought a book for the Kindle device, it will load on your iPhone for free, and vice versa. If you're reading a book both on the Kindle and the iPhone, the two devices will communicate to keep track of how far you've read.

This sounds elegant, but the app has a mildly annoying habit of freezing when it's trying to communicate with Amazon when your wireless connection is weak.

Most of the other shortcomings have to do with reading comfort.

E-book readers haven't taken off in part because people don't like reading on a computer screen. The Kindle reading device, which costs $359, tackles that by using a novel screen technology known as electronic ink. It's not backlit, so it looks a lot more like paper, but it has numerous drawbacks, most notably that it can't show a bright white or a really dark black. Since it doesn't show any colors either, it looks like gray, unbleached paper printed with weak ink.

The iPhone and iPod Touch screens are nothing like that, of course. They have great contrast and color. But the Kindle app will show all books on a white background that many will find too bright, making it uncomfortable to read. You can turn down the screen brightness, but that will leave it too dark for other applications.

Other e-book readers available on the iPhone, like eReader and Stanza, let you pick a background and text color that won't hurt your eyes. These other reading applications also let you pick the font and set the margins on the screen. The only adjustment the Amazon app offers is the font size.

I also noticed that the app cut off the ends of some indented paragraphs in Max Brooks' "The Zombie Survival Guide," making them impossible to read. The Kindle 2, which went on sale last week, doesn't do this. Hopefully Amazon will fix the app before there's a major zombie uprising.

But the Kindle on the iPhone is still the best e-book reader I've seen so far.

Other applications are hampered by a weak selection of books and inelegant ordering systems. You can probably find something you won't mind reading on the eReader and Stanza, but if you have a particular book in mind from the outset, you're likely to be disappointed. Stanza has the bad habit of freezing for nearly a minute when launched.

A third, relatively new application called Shortcovers gave me frequent connection problems, and perplexingly it seems to emphasize providing samples rather than full books, even when the books are in the public domain.

The eReader does have the virtue of being available for other cell phones, so you're not completely left out if you don't have an iPhone. Another alternative, Mobipocket, is available for practically every "smart" phone except the iPhone. But there are few phones out there with screens large and sharp enough to make reading pleasurable.

The Kindle 2 is four times the size of the iPhone. You might prefer Kindle's screen, but I think most people will be fine with the phone once they get used to it. The dedicated reader has much longer battery life, but the iPhone will last for a domestic flight, and you need a charge the phone every other day or so anyway.

Perhaps the biggest advantage of the Kindle 2 is that it can subscribe to newspapers, which load wirelessly every day. The iPhone makes up for this to some extent through free news applications.

The iPhone costs less to buy than the Kindle, but the monthly wireless service fees quickly make up the difference, so don't get an iPhone just as an e-book reader. For that, get an iPod Touch for $229. It doesn't have any monthly fees.

Try the app. With an engrossing book and the brightness turned down, you'll forget after a little while that you're not reading on paper, and your surroundings will fade as your mind is sucked into that little screen.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

When the Kindle e-reader first appeared 14 months ago, Amazon-watchers were surprised to see the e-commerce giant redefine itself as a gadget maker. But Tuesday, when Amazon.com released a free application for the iPod and iPhone that allows users to read its e-books on those devices, it cemented its original book-selling mission.

In other words, it's all about the content.

The Kindle software for the iPhone and iPod, which Amazon.com (nasdaq: AMZN - news - people ) Chief Executive Jeff Bezos first hinted at during the release of the Kindle 2 last month, allows users to buy and read any of Amazon 230,000 e-books on any of the three devices and seamlessly move them among the gadgets.

While the software gives up the Kindle's exclusive hold on Amazon's digital catalog, it taps into a potentially much larger audience for Amazon's e-books--Apple (nasdaq: AAPL - news - people ) has sold around 15 million iPhones, while Amazon had sold only around 500,000 Kindles at last count, according to an estimate by Citigroup analyst Mark Mahaney. And that, says Forrester Research analyst James McQuivey, means Amazon has definitively focused on selling e-books above selling e-readers.

"This puts a stake in the ground around the idea that they really want you to be able to access the content you buy from them on any platform. And that's something we haven't seen other major media initiatives do," McQuivey says.

Apple's iTunes store, by contrast, has traditionally sold content tied to its music players--a bid to sell more hardware rather than content. Amazon, McQuivey says, has now made clear it's taking the opposite approach. "Amazon is saying, 'This is about books. We want you to feel that you can read our books anywhere, and we want you to buy more of them,'" McQuivey says. "They're saying, 'We're not a Kindle maker. We're a content provider and a content liberator.'"

Amazon may be liberating its content, but it's not liberating its hardware. Even as the company's book-selling platform expands, it's not likely to become compatible with other content providers. That could give the e-retailer a stranglehold on the budding market for e-books, a strategy likely to rankle publishers.

In an essay for Forbes last month, tech publisher Tim O'Reilly criticized Amazon's decision to close the Kindle to non-Amazon content (see "Why Kindle Should Be An Open Book"). Unless the company opened the Kindle to formats like epub, which work across a variety of non-Amazon-sanctioned devices, the Kindle would become irrelevant in two or three years, he predicts.

With the first wave of iPhone contracts expiring in June, consumers have plenty of other options.

Memo to President Bringdown. Cool it with the "catastrophe" talk, Barack. It's contagious.

The latest example: Analysts are predicting Apple (nasdaq: AAPL - news - people ) will launch a $99 iPhone that will sell like crazy--after a quarter during which iPods sold like crazy--causing one analyst to argue that the Cupertino, Calif.-based company's shares are at risk.

Crazy, right? Apple's shares are up 15% to $97.83 this year, even as the broader stock market has fallen 8%. In January, Apple reported net income for its holiday quarter rose to $1.78 a share, or $1.61 billion, from $1.16 a share, or $1.05 billion, during the year-ago period. That's 39 cents better than the $1.39 per share analysts had expected.

The prospect of a hot new product at a great price would seem to be cause for celebration, then. But not in this economy.

In a note to investors Tuesday, RBC Capital Markets analyst Mike Abramsky became the latest to predict that Apple will launch an entry-level $99 iPhone in June or July. The result: Abramsky is now penciling in sales of between 20 million and 30 million units in fiscal 2010 for the new device. That would boost Apple's share of the global smart phone market to between 14% and 19%, he writes.

The problem: With consumer spending declining to its lowest levels since 2002, a cheap phone could damage Apple's sweet iPhone business. "The economics of an entry-level iPhone appear less attractive when factoring in iPhones/iPod cannibalization," Abramsky wrote. "Apple must sell three $99 iPhones to replace gross profit from one 3G iPhone."

Abramsky figures the new phone can sell for $99, thanks to a $200 carrier subsidy. However, it will come without a high-speed, so-called 3G connection to wireless carriers or GPS. It will also get a "light" data plan that will cost users $15 a month, less than the $30 a month users pay now.
In other words, Abramsky is predicting that the foul economic mood will turn the cheap new phone into a cannibalistic margin killer. "We remain concerned re: elevated risks to valuation from a growth and/or margin 'downshift' for Apple," Abramsky writes, slapping a target price of $70 on Apple's stock.

Even Apple bulls are cautious. "The primary concern with Apple these days is its high average selling prices and whether it can deal with the deteriorating macroeconomic environment," Kaufman Bros. analyst Shaw Wu wrote in a note arguing that Apple' shares still merited a "Buy" rating and a $120 price target.

What that really means, of course, is it's time for President Obama to slap some optimism back into the economy. And if he's not up to that, maybe he should grab his iPod, relax and wait until he's in a better mood.

AT&T For the Win

Despite the all the unlocking tools and hacks, 82% of those surveyed report their phone is not unlocked. This is good news for AT&T, who is raking in the profits - nearly $2 billion in increased revenues.

From the survey, here's how the $2 billion was calculated:

Most of my friends purchased iPhones. Despite poor phone quality, bad signals and late to get txt msg/emails through internet, most of them love their phone and enjoy their lives with that gadget.

It's pretty cool. It looks very fancy.

If somebody see that phone and try to test the iPhone, he/she really wants to buy that fantastic device.

However, for me, $199 or $299 (without tax) is too high to deal with because I got free company's blackberry phone.

I am still thinking I can have a chance to buy a new iPhone soon or later, though.

AT&T is so happy about their increased revenue such as 3 Million Dollars.

Also, their customers came from other competitors.

AT&T and Apple obviously spent the great time with iPhone last year.

But who knows?

New iPhones is coming? or another fantastic phone will be popular?

We will see.

According to early reports, the iPod Touch was a hot seller over the holidays. At the same time, sales of the mighty iPhone have been slowing in some places. Is there a connection between the two?

BusinessWeek says the Touch’s good fortune is partly a matter of economics and partly its functionality. While the iPod Touch is priced from $229 to $399, it is more affordable than the iPhone, as consumers aren’t saddled with a pricey monthly phone plan.

Plus, with the growing number of games on Apple (nasdaq: AAPL - news - people )’s App Store, the iPod Touch is presenting buyers with an alternative to a Nintendo (other-otc: NTDOY.PK - news - people ) DS or Sony (nyse: SNE - news - people ) PSP.

Kleiner Perkins Caufield & Byers partner Matt Murphy, who manages its $100 million iFund for App Store developers, told BusinessWeek that aside from the Touch becoming a “legitimate gaming platform,” young people are using it for social networking and other applications. He added that for some people, “it’s becoming a computer replacement.”

BusinessWeek also references a note from BMO Capital Markets analyst Keith Bachman that found Canadian telco Rogers Communications (nyse: RCI - news - people ) sold 130,000 iPhones in the December quarter, significantly lower than 235,000 in the previous quarter. We won’t know the latest iPhone sales numbers in the U.S. until AT&T (nyse: T - news - people )’s latest earnings are released in at the end of the month.

Another interesting datapoint on the rising popularity of the Touch comes from mobile ad network AdMob. Its has released December figures Thursday, and while our usual caveat that these figures are from only one vendor still stands, they show a jump in the number of ads it served up to iPod Touch users—from 86 million in November to 292 million in December. The requests doubled overnight on Christmas, and remained strong throughout the close of the month.

Electronics chain Best Buy Inc. said Tuesday it will offer refurbished iPhone 3Gs at a steep discount.

The phones, made by Apple Inc., start at $149 for the 8-gigabyte version and $249 for 16 gigabytes, compared with $199 and $299, respectively, for new iPhones sold at Best Buy Mobile stores. A two-year service contract with AT&T Inc. is required.

The refurbished phones will be available at 350 locations initially, then at all U.S. locations offering AT&T by the end of January, the consumer electronics chain said. The phones have been returned by customers during the 30-day trial period and restored to "like-new" condition, Best Buy said.

The iPhone 3G connects to cellular providers' speedier third-generation networks and delivers faster Web surfing and online video than the original model.

For Apple, the announcement marks another step away from tightly controlling retail sales of its products. Best Buy was the first independent retailer to sell iPhones. And Wal-Mart Stores Inc. said last month it would also sell the iPhone with a $2 mark down.

Best Buy shares jumped 94 cents, or 3 percent, 30.94 in midday trading.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Wal-Mart to start selling Apple's iPhone on Sunday

Associated Press, 12.26.08, 11:10 AM EST

Wal-Mart iPhone training materials
Boy Genius Report first broke the story back in October that Apple would begin selling the iPhone at Wal-Marts. The actual date of release appears to be December 28th. Wal-Mart employees are already receiving training on iPhone activation (see photo above). Today, a new report from Boy Genius Report claims that Apple may be reintroducing the 4GB iPhone to be sold at Wal-Mart for only $99 with a two year contract. The site is not entirely confident about the report, so suggests this possibility should be taken with caution.

When Apple originally introduced the iPhone, it came in 4GB and 8GB models. Only a couple of months later, Apple discontinued the 4GB model altogether and dropped the price of the 8GB model. Apple currently sells an 8GB ($199) and 16GB ($299) iPhone with 2 year contract. Aggressive $99 pricing for an entry level iPhone would correlate with comments made by Steve Jobs in October. Jobs said that they needed to continue to be aware of a possible "price umbrella" below the iPhone that competitors may take advantage of. Analysts have suggested that Apple could feasibly sell the iPhone for $99.