A long, slow death

Stephanie Clifford and Julie Bosman have an article in The New York Times about the decline of the Kindle:

Wal-Mart Stores, the nation’s largest retailer, said it was dropping Amazon’s Kindle tablets and e-readers, a sign of how seriously it views Amazon as a competitor in the consumer goods market.
Target said in May that it would stop selling Kindles, though other stores, including Best Buy, Staples, and Office Depot, said recently they would continue to carry the devices.
Wal-Mart did not specify why it was discontinuing its Kindle sales, but analysts said it was not hard to decipher, given that the retailer will still sell similar devices from companies like Apple, Google, Barnes & Noble, and Samsung.
Physical retailers have been worried about customers who browse in stores and then buy from online competitors instead. Displaying the new Kindles encourages that behavior, analysts said.
While earlier black-and-white Kindles were good only for reading digital books, the newer Kindle Fire, introduced in 2011, can be used for e-books, movies, games, and potentially anything Amazon sells, thanks to a built-in web browser.
“The Kindle Fire is the Trojan horse,” said Andrew Rhomberg, the chief executive of Jellybooks, an e-book recommendation site. “It’s a shopping platform that covers so many more categories than e-books. It affects Wal-Mart in a different way than the early Kindles and e-readers did.”
Colin Gillis, a technology analyst for BGC Financial, said that, by selling Kindles, Wal-Mart was “encouraging its customers to step into that ecosystem. Every time you pick up your Kindle, they’re trying to get you to buy patio furniture” at Amazon, Gillis said. “If I were Wal-Mart, I certainly would not be encouraging my customers to go down the path of owning a Kindle and buying things from Amazon.”
Moreover, the Kindle line, and most tablets, are only marginally profitable for retailers, said Sarah Rotman Epps, an analyst at Forrester Research. “A lot of them have had it with tablets, other than the iPad,” she said. “They’re not high-margin products, and other than Apple ones, no one is selling these devices in great volumes anyway. For Wal-Mart to drop Amazon is more of a symbolic blow rather than a substantive one.”
However, if more retailers back away from selling the Kindle, Amazon will lose valuable physical display space that it cannot match with a website, exposure that becomes especially important during the holiday shopping season.
“Amazon still needs a way to get the hardware into people’s hands,” Gillis said.
Amazon declined to comment on Wal-Mart’s decision. The low profit from Kindle sales and the threat of competition from Amazon raises the question of why retailers wanted to sell the device in the first place. One reason is that technology companies and retailers tend to have relationships that quickly turn from cooperative to competitive. “A lot of these technology companies look like they’re great friends in the beginning, and as they grow and add products, they move from friend to foe,” said Fiona Dias, chief strategy officer of ShopRunner, an online-shopping service, and the former chief marketing officer of Circuit City. She said that Amazon was a clear example of this, and Google, with its Wallet mobile-checkout product and its recent decision to charge retailers to be included in product searches, was another. Even Apple, with its Passbook system that allows mobile payments, and the expanding list of items sold via iTunes, should unnerve retailers that sell its products, Dias said.
Analysts also say that, early on, there were few alternatives to the Kindle. It was one of the first widely available e-book readers when it was introduced in 2007 for $399. Now, consumers can choose from dozens of basic black-and-white e-readers, some of them for less than $70, and a wide range of color tablets.
Wal-Mart will not order any more Kindles after its stock runs out, and Kindles will no longer be available at its Sam’s Club and walmart.com divisions along with Wal-Mart stores, said Sarah Spencer, a spokeswoman. Wal-Mart’s decision, sent in a memo to employees, was first reported by Reuters.
Other big retailers, however, said they planned to continue carrying Kindles. “We’ve seen good customer demand in our stores for those products,” said Jeff Haydock, a Best Buy spokesman. “Because we stand for choice, we look to bring in any of the latest technology and put it in our stores so customers can look at things, compare things and find the products that are best for them.”
At Office Depot, which added the Kindle Fire last winter, Mindy Kramer, a spokeswoman, said: “we saw this as the opportunity to really enhance our portfolio of e-readers and become a destination for these high-profile products.” Kramer added that the line’s wide range of prices appeals to shoppers.
Carrie McElwee, a Staples spokeswoman, declined to give specifics on Kindle sales or the company’s strategy with the products, but said that the store had expanded its selection as the offerings grew.
The items are also for sale at Radio Shack and at Tesco and Waterstones in Britain.
Rotman Epps said carrying Kindles fit into some retailers’ strategies, citing Best Buy’s efforts to market itself as tablet central. Dias, though, called those decisions 'shortsighted'. "They’re thinking about today’s sales,” she said. “Why support the guy that’s trying to put you out of business?”

Rico asks if a Trojan horse would be one equipped with a condom? (Just kidding.) But "other than Apple ones, no one is selling these devices in great volumes anyway" is a good sign. Though trying to be all things to all people, like Amazon, is a hard road...