Amazon Adds Color to Kindle: Rumor

An acquisition of Touchco could leave a big question mark hanging over Amazon's future relationship with its current display partner, E-Ink.

At least one analyst feels that Amazon has its eye on much more than just the e-reader market, as evidenced by its recent decision to release a software developer kit for building Kindle applications.

"You're not going to come out with another device that will only read books," Allen Weiner, a research vice president at Gartner told TheStreet, explaining that Amazon is already the distribution point for movies and TV shows. "[Amazon] could bring out another device that would take advantage of new opportunities - that's clearly the vision."

In addition to a new all-singing, all-dancing Kindle for TV and movies, Weiner is keen to see what partnerships Amazon will forge to take on Apple.

"One would be a partnership with Adode (ADBE); neither the iPad nor the iPhone support Flash," he said. "There could [also] be a situation where Google and Amazon work together because Google is looking for more places for the Android platform and the Chrome browser."

"This is the e-reading love triangle," he added.

Amazon keeps its Kindle sales numbers under wraps, but is said to have been enjoying strong demand for its e-reader. With analysts expecting e-reader sales of around 2.5 million by the end of 2010, The Washington Post reported that Amazon hit the 3 million mark in December, citing a source close to the company.

E-readers have become a much more common sight in the last year, and Forrester Research recently said that 900,000 of the devices would be sold over the holiday season. With Apple and Amazon expected to lead the e-reader race, the space is nonetheless becoming much more crowded.

Software giant Microsoft (MSFT) is entering the fray with its Courier touchscreen device, and Sprint's (S) forthcoming Skiff has also been grabbing plenty of attention.

Amazon shares dipped 6 cents, or 0.5%, to $118.5 on Thursday as the Nasdaq fell 1.55%.

-- Reported by James Rogers in New York

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