Kindles Getting Cheaper, and Huge: 10 Percent of Amazon’s Business Next Year

Amazon’s Kindle e-reader, a gawky novelty just three years ago, is now a big business getting bigger. Really big.

Jeff Bezos and company continue not to release sales numbers for the devices, but everyone else keeps guessing. Citigroup’s Mark Mahaney, an Amazon bull, has bumped up his sales estimates, and now thinks the company will sell 17.5 million devices this year, and another 26 million in 2012.

The big picture is that Mahaney thinks Kindle readers and books will generate $6.1 billion for Amazon next year–nearly 10 percent of its overall sales. Again, remember: This business didn’t exist until Thanksgiving 2007.

Also remember that all of this has been as the Kindle has faced competition from Apple’s iPad on the high end, Barnes & Noble’s Nook line in the middle, and a bevy of very cheap e-readers on the bottom.

One obvious reason for the Kindle’s success: It’s a popular product that keeps getting cheaper and cheaper. The first Kindles went for $399, and now the lowest priced ones, which come with a smattering of ads, go for $114. Mahaney thinks they’ll be below $100 by Christmas, and that seems like a very conservative guess.