Analyst: Half a Million Kindles Sold in '08

(MoneyWatch)  For reasons that have never been entirely clear, Amazon.com has not been at all forthcoming about its Kindle e-book reader. One aspect no doubt has to do with the company's choice to employ a proprietary technology in an age when open-source products are proliferating.

But Amazon's brass must not have been able to reach a consensus about the Kindle, and whether it helps or hurts the online retailer massive book-selling business.

At present, Amazon says the device is out of stock, but it has never revealed how many of the pricey ($359) devices were sold.

Today, however thanks to some clever detective work by Citi Investment Research Analyst Mark Mahaney, we have a new estimate that Amazon sold 500,000 Kindles last year. This is substantially more (~35 percent) than many analysts, including Mahaney, had been predicting.

Mahaney noted that a regulatory filing from Sprint Nextel Corp., which is the main wireless network for Kindle downloads, stated that 210,000 of "certain wholesale devices" were activated on Sprint's network during the July-September period by "wholesale partners prior to selling the device to the end customer."

Mahaney concludes that this figure refers to the number of Kindles that were purchased during Q-3 last year. (So far, neither Sprint nor Amazon is reacting to the report.)

In Q-4, Amazon added another 45,000 book titles to the Kindle's inventory, bringing the total to 230,000. It's hardly "the long tail," yet, but it does indicate that a merket for e-books is beginning to emerge.

Industry rumors indicate Amazon will be releasing a new version of the device soon. Mahaney believes that revenue from the Kindle could rise to $1.2 billion by 2010 -- which would account for as much as four percent of Amazon's total revenue that fiscal year.

Note: This post continues what will be an ongoing series of articles about the growing e-book industry. Our most recent previous post covered Smashwords, a digital self-publishing platform.