Amazon expected to unveil Kindle 2 on Feb. 9

By now, plenty of educated guesses have been offered up about what the next-generation Kindle e-reader will look like and do, and fans expect to find out for sure when Amazon.com holds a news conference in New York on Feb. 9.

But even if Kindle's design changes are dramatic, some handheld analysts question how much the e-reader market can grow—especially when it and other e-reader handhelds can cost more than $359.

"The Kindle cannot be categorized as a success, yet," Van Baker, a consumer electronics analyst at Gartner Inc. said in a recent interview. "The product enjoys rave reviews from mobile professionals, but there are not that many mobile professionals in the market.... We just don't see a mainstream market for this device at least at its current price [starting at $359]."

E-readers still need to find the mass consumer market, which includes, "for lack of a better description, the 'Joe Sixpack' who comes home and watches football," Baker said.

Until then, Baker wondered how Amazon.com and other e-reader makers can grow much beyond the mobile professional crowd, which tends to include early adopters who generally love to flaunt their tech purchases to friends, and even strangers, during long trips.

"We at Gartner are struggling to see what the compelling value proposition of the Kindle is for the average consumer," Baker added. "For the average consumer, a paperback book and a printed newspaper still work pretty good."

Baker said he knows his views are out of step with the publicity surrounding Kindle, which got a November boost from Oprah Winfrey that goosed sales just before Christmas. And he's aware that more than 1 million Kindles have been sold, a figure that's still far below what is needed for the device to be considered a consumer success.

"Oprah aside, look who's excited about Kindle, and it's the mobile professional who travels a lot—and the people singing its praises are the technology press or the mobile pros, " Baker said.

In addition to its steep price, Kindle relies on a proprietary file format and limits users to a library that sounds large at 225,000 books, but is still limited, Baker added. "All these factors combine to make the product a niche product for the foreseeable future," Baker said. "It's an interesting niche product, but a niche product nonetheless."

The sluggish economy is only going to make the situation worse "as people cut back on discretionary spending," Baker said.

As far as the next-generation device goes, bloggers presume that Kindle 2 will have a joystick instead of a scroll wheel with a button re-design to prevent accidental page turns.

Kindle fans expect the second-generation model to include a new microchip, called Broadsheet, from Kindle's display makers, Epson and E-Ink. Less clear is whether it will offer a touch screen or backlight like its major competitor, the Sony Reader Digital Book PRS-700BC. But adding a backlight would cut into battery life.

Some analysts, including Baker, have hailed the Kindle 2's design, based on leaked photos from the BoyGeniusReport.com, which seem to show the new model as flatter, with fewer angles, than the original.

A spokeswoman at Amazon.com would not reveal anything about a next-generation Kindle, even whether one will be announced at the news conference next month.

Another analyst, Jack Gold of J. Gold associates, said the Sony device and Kindle have "done all right in the market, but the price is still too high for the mass market and the technology needs to evolve."

Gold predicted that electronic paper displays will soon offer color, and future models will allow for Wi-Fi or 3G connections. (The current Kindle uses the EV-DO network of Sprint Nextel Corp.) Add-ins like a music player and plug-in SD cards are "probably on the horizon as well," Gold said.

Still, Baker and other analysts said that Amazon and Sony might want to go slow in adding extra features, which could turn e-readers into netbook-like devices. Adding too many extras will tax battery life, which tends to defeat the point of having a device "that a user can throw in a briefcase and not have to charge for a week," Baker said.

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