Amazon sells more ebooks than paperback books in fourth quarter CEO Jeff Bezos said in a fourth quarter earnings statement Thursday that the ebook-selling milestone "has come even sooner than we expected."

Share said it is selling more Kindle ebooks than paperback books. CEO Jeff Bezos said in a fourth quarter earnings statement Thursday that the ebook-selling milestone "has come even sooner than we expected."

The company said that in all of 2010, it sold 15% more Kindle ebooks than paperbacks. In July, reported it had sold more Kindle ebooks than hardcover books. For all of 2010, it sold three times as many Kindle ebooks as hardcovers. Free Kindle books are excluded from those figures.

Bezos also revealed that Amazon sold "millions" of third generation Kindle e-reader devices, which have the paper-like e-ink Pearl display, making it the best-selling product in Amazon's history. The third generation Kindle with a 6-inch screen and Wi-Fi capability sells for $139.

The Kindle accounts for about half of all e-reader sales, according to analysts at Forrester Research and Yankee Group. Gartner has forecast sales of 11 million e-reader devices globally in 2011, up from 6.6 million in 2010.

Allen Weiner, an analyst Gartner, said e-reader prices have dropped, helping spur ebook sales. Another factor in Amazon's increased ebook sales is a greater public understanding of the devices and how they function, he said. Weiner estimated that ebooks now account for less than 10% of all book sales in North America.

The biggest question remains as to how well e-readers, which are mostly black and white, will compete against media tablets, such as the Apple iPad and the Samsung Galaxy Tab, which have more functionality than e-readers but cost much more. The iPad starts at $499.

"Ebook readers like Kindle are really going to have to go well below $99" to compete with coming tablets running Android and other operating systems, Weiner said.

The second generation iPad is expected to have an even clearer display technology, and Google is just getting started with its eBook and eBookstore concept, announced in December. Google is expected to tie its EBookstore concept with new tablets running on the Android 3.0 Honeycomb operating system that is maximised for tablets, such as the Motorola Xoom. Google's moves will apply more pressure on Amazon and Barnes & Noble, which sells the colour Nook e-reader, Weiner said.

"Amazon needs to do everything it can to reaffirm its relationship with book publishers," Weiner said. "By saying it has sold more ebooks than paperbacks, Amazon is telling publishers that there a lot of e-reader devices out there, and there may be a lot of noise about iPad and what Barnes and Noble is doing, but we're the company to beat and we own this space."

Weiner said Amazon is "seemingly a huge power in publishing, but last year a number of companies started nipping at its heels, including Apple." There isn't a lot of profit in selling paperbacks, Weiner said. By noting it sells more ebooks than paperbacks, Weiner said Amazon seems to be telling publishers and investors: "We still own this space, and not Google or Apple."

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