Another competitor for Kindle

How many Kindles is too many Kindles? When Amazon (AMZN) first introduced its e-reader over a year ago, its sales made it a spectacular consumer electronics success. But, it may not have made the e-commerce company any money, despite helping Amazon sell millions of e-books.

No successful product ever lasts long in the market without sparking competition. And so, Barnes & Noble (BKS) came up with an e-reader to help balance trouble with its bricks-and-mortar sales. Sony (SNE), which has been bested in the consumer electronics field year after year, launched a reader. And the list of Kindle competitors is still growing.

According to an exclusive report in The New York Times, Verizon (VZ) and Best Buy (BBY) will team up to launch an e-reader of their own. It will be built by iRex Technologies, which already builds a "Kindle-like" device in Europe. The paper reports that subscribers will be able to buy the device at Best Buy stores and download content over Verizon's 3G network.

It's old news that Forrester, an IT research company, found that people are not inclined to buy e-readers at their current price points, which limits the market. What Forrester did not look into is: what happens when there are half a dozen or more e-readers competing for what may be a relatively small market?

The answer to that question is simple. Everyone in the e-reader business loses money on the devices. Whether companies make money on the e-book downloads is another question. But a lot of red ink will flow proving whether the e-reader is actually a viable product.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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