The latest Kindle has gadget geeks jumping for joy, but will the e-reader’s success do the same for Amazon

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There are two version of this third generation e-reader and both began shipping on Friday.

The more expensive is the Wi-Fi + 3G Kindle which sells for $189. The Wi-Fi-only Kindle sells for $139. Both model are temporarily sold out due to strong customer demand.

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The new versions have 20% faster page turns than the second-generation model. The devices each weigh 8.7 ounces, down 15% from the previous version. Storage is 4GB, room for about 3,500 books, and double the storage space of the previous models. They also have 6-inch diagonal screens, the same as the previous version.

The Kindle has been the best-selling item on Amazon.com for two years, the company says on its Web site, although it has never publicly stated its sales numbers.

And the migration from traditional to digital shows no signs of slowing.

Last month the company released a statement saying it's now selling more e-books than hardcover books - specifically, 143 e-books for every 100 hardcover books.

What’s the trade?

At $139 Amazon’s not going to be making money on Kindle's hardware anymore, says Colin Gillis of BGC Partners. The economics are quesitonable. The company is facing increased marketing costs and a weak consumer. I just can’t justify the 46 multiple on the stock.

* Gillis has a ‘sell’ rating on Amazon, but less because of the Kindle and more because he largely sees Amazon as an e-commerce company whose growth is challenged by the weak consumer.

 

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