Amazon gets a gift: Kindle reader sales

Californian Brian Bird received Amazon.com Inc.'s Kindle electronic-book reader from his girlfriend as a gift - and immediately sold it.

With the Kindle out of stock at the company and asking prices on the Internet at twice the device's $359 retail price or more, he got his girlfriend's permission and found a buyer on Craigslist willing to pay $500.

"People who want to give it as a holiday gift have to pay a premium to get it in time," said Bird, a salesman for a Redwood City, Calif., Internet company. "If the existing one can be sold at a profit and I can buy the new version when it comes out in two or three months, then it's worth the effort."

Stoked by an Oprah Winfrey endorsement in October, the Kindle sold out in November. With Christmas quickly approaching, used Kindles are listed on eBay, Craigslist and Amazon.com's second-hand product site for as much as $1,500.

The run on Kindles ambushed Amazon.com, which had expected to have enough supply for the rest of the year. As the Seattle retailer struggles to get more in stock, it's asking buyers to join a three-month waiting list. While the shortage risks alienating shoppers and leaving some sales on the table, the Kindle's buzz may pay off in 2009.

"It's a great position to be in, given the uncertainty of the economy," said Bryan Eshelman, managing director at Alix Partners LP, a retail consulting firm. "Could they have ended up with more inventory of this, and therefore, more sales in this time period? Sure. But in this economy, I don't fault its strategy."

Amazon.com, the world's largest online retailer, introduced the Kindle in November 2007. The paperback-sized device allows users to download books, magazines and newspapers, displaying them on a high-resolution screen that's designed to look more like paper. This is the second year Amazon.com has sold out of the product ahead of the holiday season.

Analysts estimate that Amazon has sold 400,000 to 450,000 Kindles so far and probably will sell another 500,000 in 2009.

"That ability to grab a book electronically from wherever you are is very powerful and had generated a lot of word of mouth," said James McQuivey of Forrester Research Inc. in Cambridge, Mass.