* Larger reader with 9.7 inch display retails for $489
* Kindle DX includes PDF reader, 3.3 gigabytes of memory
* Five universities to launch trials this fall
* Amazon shares end slightly higher on Nasdaq
(Adds analyst comments, updates shares)
By Robert MacMillan and Alexandria Sage
NEW YORK/SAN FRANCISCO, May 6 (Reuters) - Amazon.com Inc
introduced a larger, souped-up Kindle electronic reader
on Wednesday designed for students and newspaper readers, but a
$489 price tag could make it too expensive for many consumers.
The Kindle DX, which has a 9.7 inch black-and-white
display, is designed to be a more friendly vehicle for
textbooks and newspapers, which often need a larger space to
display their content effectively. The DX has about 2.5 times
the surface area of the normal Kindle and costs $130 more.
Despite the popularity and buzz surrounding the Kindle
brand, the DX faces challenges, analysts say. It debuts at a
time when consumer spending is ebbing due to the recession.
And while it has a less-cluttered layout than the average
computer screen and is easier on the eyes than a monitor, the
DX provides little of the interactivity that people get on other
hand-held devices. It does not offer color or touch-screen.
Super-sizing the Kindle also appears to ignore consumers'
fascination with pocket-size gadgets such as Apple Inc's
iPod and iPhone.
"It seems like you're fighting the impulse among consumers
to go to smaller, more portable ways of acquiring media, such as
an iPhone or a netbook," said Alan Mutter, a technology venture
capitalist and former newspaper editor who runs the newspaper
business blog Reflections of a Newsosaur.
The new Kindle comes as other companies including Sony Corp
experiment with digital readers as ways to get people
to use -- and pay for -- traditional media, even as they spend
more time online and less time on the printed page.
Amazon CEO Jeff Bezos said The New York Times, The
Washington Post and The Boston Globe will start pilot programs
with the DX this summer. He said five universities will do pilot
programs with the reader acting as an all-in-one textbook.
The DX also allows people to read personal documents, and is
touted as a way for businesspeople and others to avoid having to
carry around an assortment of loose papers.
Besides making highly formatted pages easier to read, the DX
has more memory, 3.3 gigabytes, which can hold up to 3,500 books
versus the normal Kindle's 1,500.
But at $489, analysts questioned how many economy-conscious
consumers would open their wallets for the new gadget, which
weighs nearly 19 ounces.
"It is somewhat ironic in that the device is getting more
expensive as the source content that is well-suited to it is
becoming more mass-market such as newspapers and textbooks,"
said Ross Rubin, consumer technology analyst at the NPD Group.
Amazon is quick to tout its Kindle as the future of reading
-- and a sales driver for the Seattle-based giant -- but does
not disclose its sales and profit breakdown, leading some
analysts to view the Kindle as an interesting niche device with
minor mainstream appeal.
Amazon is hoping that newspaper publishers find the Kindle
DX a better way to show off their daily editions.
The New York Times
and The Washington Post
will offer the DX at a reduced price to readers where home
delivery of those newspapers is not available.
The announcement comes hours after The New York Times
concluded a series of marathon talks with The Boston Globe's
biggest union to win millions of dollars in cost concessions
that the Times says it needs to keep the paper alive.
Newspapers are already available on the regular Kindle. A
subscription to The New York Times costs $13.99 per month, and
the Washington Post and Los Angeles Times cost $9.99.
"It's certainly not a game-changing move for the newspaper
business at this point in time," NPD's Rubin said. "E-readers
are just a piece of the puzzle," he said.
Textbook publishers Cengage Learning Inc [CENGL.UL],
and Wiley will offer books through the
Kindle store starting this summer, with others to follow.
Trials using the DX beginning this fall will be conducted
at Arizona State University, Case Western Reserve University,
Princeton University, Reed College and the University of
Virginia's Darden School of Business, the company said.
Amazon did not disclose the price of e-textbooks, but they
are likely to be at a discount to physical books.
The hand-held Kindle, updated earlier this year and only
available in the United States, allows users to read books,
newspapers, magazines and blogs. Like the regular Kindle, DX
users will be able to get access to books that can be downloaded
through the Kindle store for $9.99 in most cases.
Amazon shares ended 9 cents higher at $81.99 on the Nasdaq.
(Writing by Alexandria Sage; Editing by Derek Caney, Andre
Grenon and Matthew Lewis)