The Kindle has become the most purchased item given as a gift in the history of the powerful e-commerce site,  Amazon.com (NASDAQ:AMZN). And, Amazon announced that “On Christmas Day, for the first time ever, customers purchased more Kindle books than physical books.”

Amazon said during the holiday rush from November 15 to December 16, the Kindle Wireless Reading Device, Apple (NASDAQ:AAPL)  iPod touch 8 GB; and Garmin nuvi 260W 4.3-inch GPS were the best-selling electronics devices.  The top-selling books were “Going Rogue” by Sarah Palin, “The Lost Symbol” by Dan Brown, and “The Help” by Kathryn Stockett. The leaders in the software category were Microsoft (NASDAQ:MSFT) Office Home and Student 2007, Adobe (NYSE:ADBE) Photoshop Elements 8; and Microsoft Office 2008 for Mac Home & Student Edition. The top wireless products were the Nokia (NSADAQ:NOK) 5800 XpressMusic Unlocked Phone, Plantronics 510 Bluetooth Headset,  and RIM (NASDAQ:RIMM) BlackBerry Bold 9700 Phone.

The news about the Kindle should send a shutter through the managements at Barnes & Noble (NYSE:BKS), Borders (NYSE:BGP), and most book publishing companies. Amazon plans to control the channel for book content much the way Apple did with music almost ten years ago. Amazon is at the beginning of a process which will allow it to set prices for the online versions of  books and, perhaps, determine the profit margins of publishers.

Amazon has demonstrated  that the increase in sales of the e-reader is happening faster than most experts expected, which should drive down the sales of physical books fairly rapidly.

Amazon has become the dominant force in book sales over the past year, much as Apple did in the last decade, with multimedia distribution.

Douglas A. McIntyre