Kindle 2 Looks Good, but Still a Niche Gadget (AMZN)

Amazon's (AMZN) new Kindle 2 e-book reader, unveiled today in New York, is more attractive than its predecessor: It's thinner, has a sleek metal back, and nicer buttons. And it has some improved features: More storage capacity, better page-turning functions, and the screen displays more shades of gray.

But Amazon did not do much today to make the Kindle significantly more attractive to mainstream buyers: It's still $360 and it's still only really good for one thing -- reading books.

This also means it's still little threat to Apple's (AAPL) iPhone and iPod touch, or future Apple Internet tablets; or so-called netbooks -- inexpensive, lightweight laptops from PC makers like Dell (DELL) and Acer.

What could have made the Kindle more attractive?

A lower price tag is the most obvious step. If Amazon wants to get the whole country reading books on a plastic gadget, it'll need to be less than $360.

We'd also be more likely to buy a Kindle if we could stick the last 20 books we bought from Amazon (and haven't read yet) into it. This is a big reason why the iPod took off -- because you could import music from your CD collection; not just buy new digital music from the iTunes store. (Which didn't even exist until years later.)

To be sure, we're in the infancy of e-books and e-book readers, and Amazon has as good a chance as anyone to make it work. Sony's reader certainly isn't leading. And other devices, like iPods, aren't as good for reading books.

But for now, we still see the Kindle as an expensive toy for reading enthusiasts, frequent travelers, and gadget lovers -- and not yet a mainstream device. Today's improvements will make new Kindle buyers happier than they'd be with the old one. But they alone won't do much to dramatically drive adoption.

Kindle 2 Looks Good, But Still A Niche Gadget (AMZN)