Amazon.com Inc., the world's largest Internet retailer, introduced an electronic reading device Monday, seeking to do for books what Apple Inc.'s iPod did for music.
The portable device, called Kindle, sells for $399 and is about the size of a paperback. More than 90,000 books are available electronically, including best sellers and new releases, many of which cost $9.99 each, Seattle-based Amazon.com said in a statement.
Amazon.com boosted technology spending to add Unbox, a video-download service and a music-download store to reduce its reliance on sales of books, CDs and DVDs. The stock has doubled this year, topping $100 last month, as shareholders have expressed optimism the investments will pay off.
"It's a bold move by Amazon, it's a very promising start," said Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York. "They're developing their consumer expertise and service expertise, and their ability to catalog and search for books all together and actually getting out in front."
Chief Executive Officer Jeff Bezos has sought to diversify product offerings as Barnes & Noble Inc. and other bookstores have cut prices and promoted customer-loyalty programs. Sales of books, DVDs and other media comprised 64 percent of third-quarter revenue, down from 67 percent a year earlier. More specific figures aren't provided by Amazon.com.
Amazon.com rose 58 cents to $79.18 at 4 p.m. in Nasdaq Stock Market composite trading. Barnes & Noble and Borders Group Inc. shares both fell more than 4.6 percent.
The Kindle wireless system uses EVDO, the same high-speed data network as high-tech cell phones, and doesn't require a PC to download content to the device, Amazon.com said. Kindle is able to download books in less than a minute to a display screen, the company said.
The word "Kindle" was chosen "to ignite a passion for reading," said Steve Kessel, Amazon.com's senior vice president for worldwide digital.
The 10.3-ounce Kindle weighs less than a paperback and can hold 200 books, Amazon.com said. Users can subscribe to newspapers, magazines and more than 300 blogs.
"This was really designed to be super simple for readers," Bezos, 43, said Monday in an interview. "Over time, I think we will be able to have this be a very meaningful and significant business for Amazon.com and a very profitable one."
Amazon.com may eventually reduce Kindle's price because the cost of most electronic devices have come down over time, Lindsay said. The device's design isn't as "slick" as a product designed by Apple or Sony Corp. and it may be improved, said Lindsay.
Amazon.com sells products in more than three dozen categories ranging from power tools to musical instruments. Purchases of electronics and general merchandise gained 54 percent in the third quarter, while books, CDs and other media sales increased 36 percent to $2.09 billion, helped by sales of the final Harry Potter book.
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. Sony introduced a new version of its portable book reader this year.