"While online retail giant Amazon was not the first company to launch an e-book, its Kindle offering spurred both awareness and demand for e-books," reads the report from the technology research firm. "E-book sales are taking off, and the business models are being hashed out among a growing number of equipment manufacturers and content providers."

Launched by Amazon in November 2007, the Kindle singlehandedly revived a consumer electronics category long defined by much-hyped misfires. The Kindle changed that pattern of failure mainly by providing a seamless content delivery service in partnership with wireless partner Sprint, according to In-Stat.

To date, Amazon has not disclosed precise sales figures for the Kindle, and CEO Jeff Bezos recently told shareholders it probably never will for competitive reasons. Citigroup analyst Mark Mahaney estimated that Kindle sales could rise to $1 billion by 2010, contributing about 4% of the company's revenue.

He estimates that 300,000 Kindles may have been sold in the first quarter, and analysts expect the device to cross the 1 million mark by year's end.

The In-Stat report acknowledges that the Kindle doesn't come cheap. The latest version of the original line goes for $359, while the larger-screen Kindle DX -- geared toward reading newspapers and magazines -- will sell for $489 when it comes out this summer.

"But as price points fall, and the usage scenario becomes clearer to mainstream consumers, we believe there is a strong revenue opportunity for manufacturers and suppliers to the e-book market," according to the study authored by In-Stat analyst Stephanie Ethier. Other companies that stand to gain from a growing market for e-books include manufacturers such as Sony, iRex Technologies and Jinke Electronics and content providers including Google and Whispernet.

By next year, In-Stat expects e-book shipments to more than double from 2.4 million to 6.1 million.

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