UPDATE 1-Amazon's Kindle iPod of the book world - Citigroup

Tue Feb 3, 2009 10:23am EST

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Feb 3 (Reuters) - Online retailer Amazon.com (AMZN.O) could see revenue related to its "Kindle" e-book reader reach beyond $1.2 billion by 2010 -- over 4 percent of Amazon's revenue for the same year, Citigroup said.

"The Kindle has become the iPod of the book world," analyst Mark Mahaney said.

Amazon sold some 500,000 Kindles in 2008, which is 32 percent more than the number of iPods sold in its first year, the analyst said. Mahaney had estimated the sale of 380,000 Kindles in 2008.

The e-retailer, which topped analyst estimates for the fourth quarter and also forecast first-quarter sales above expectations, is planning to launch the latest version of the Kindle on Feb. 9.

"Kindle's success highlights the very significant and consistent innovation focus that Amazon has maintained over the past five years and helps hedge the company against the digitization of media products," said Mahaney, who has a "hold" rating on the company.

Kindle competes with Sony Corp's (6758.T) e-book reader.

Shares of Seattle-based Amazon were down 31 cents at $60.84 in early morning trade Tuesday on Nasdaq. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Himani Sarkar)

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