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Last week Amazon.com released Kindle 2, an update to the electronic book reader unveiled in November 2007. The “e-book” is Amazon’s first foray into hardware production, and is an attempt to capitalize on what many see as the next logical market to go digital. While the Kindle is a noble first step (Amazon claims to have sold half a million units last year), it is not yet the paper killer the company is hoping for.

The Kindle’s plight is largely the original iPod’s plight: both are/were important, but nonetheless niche products. When it was released in 2001, the iPod was immediately seen as an important — even revolutionary — product, just as was the case with the Kindle in 2007. The selling point for the original iPods was their capacity: “1,000 songs in your pocket.” This was a cool idea for many consumers, but most did not see it as a justification for the $500 price tag. One thousand songs was less than an entire music collection, but — coming from a world of CDs and cassettes — also much more than one would listen to on a day-to-day basis.

While iPods had respectable sales from the start, the real spikes in sales came with the introduction of the Mini, Nano and Shuffle models. Steve Jobs recognized that the iPod was a niche product, and that in order to sell it to the masses it should be simple and cheap, even if that meant less capacity and the absence of some of the more exciting technologies. Of the three, the Shuffle was obviously the most daring. While it had no screen and held only a few albums, it was dirt cheap and simple. Whereas previously a several-hundred-dollar iPod was a significant investment for most people of most incomes, the iPod Shuffle was a giveaway, something competitive with a CD player.

If Amazon’s Jeff Bezos wants the Kindle to truly revolutionize the way we read, as Steve Jobs did with the way we listen to music, he must make a product that is appealing not only to all gadget-savvy people, but all readers. On-the-go downloading, 1,500-book capacity, newspaper and magazine subscriptions and a full keyboard are all nice features, but they are ultimately superfluous to the reading of e-books. Amazon needs to pare down the Kindle, perhaps release a simple, cheap version alongside a more expensive model that can show off Amazon’s technology prowess (just as Apple did with the iPod classic and iPod Nano/Mini/Shuffle). With a simple, one-function and, above all, cheap device, Amazon can make consumers not question the need for a $350 multi-function reading device, but wonder how they ever did without a $100 reader that can hold the few books they’re reading simultaneously.

Granted, this will not be easy. Even the first Shuffle cost well over $100. But Amazon, like Apple did in 2001, has its start. Now if Amazon can, over time, be innovative enough to make a Shuffle-like device, genius in its simplicity, then they will truly make possible the transition from print to e-ink.