Apple Inc iPhone and iPod Touch users can now read books on their devices using software from Amazon.com Inc's Kindle electronic reader, boosting shares of the online retailer 5 percent.
The news on Wednesday dispelled speculation that Amazon plans to compete more directly with smartphone providers by adding more functions to the Kindle, which represents a tiny fraction of the company's business.
Moody's Investors Service also upgraded Amazon's long-term ratings on Wednesday, citing its ability to generate strong growth and maintain healthy profitability during a very challenging retail climate.
Amazon's free application is available on Apple's Web store and allows consumers to synchronize Kindles with iPhones and iPod Touch. Users will have access to more than 240,000 books available on Kindle, Amazon said in a statement on Wednesday.
The Kindle, priced at $359, has excited investors and gadget lovers since its launch in 2007, with some speculating the device might eventually be enhanced to compete with gadgets like the iPhone or iPod.
But Wednesday's news suggested Amazon was more interested remaining the No. 1 retailer of e-books, rather than competing directly with Apple on devices.
The announcement by Amazon is significant because it reduces the possibility of a competing, smaller form factor device becoming a player in the market, wrote Stifel Nicolaus analyst Scott Devitt in a note.
Standard & Poor's analyst Michael Souers wrote that Amazon was paving the way to becoming the dominant e-book platform, while adding that reading on devices like the iPod or iPhone would still be challenging, given their small screen sizes.
KINDLE VS IPOD, AND VICE VERSA?
Some gadget lovers had speculated that a larger iPod-like device rumored to be in the works at Apple would have included e-book reading functions to rival the Kindle.
With the Kindle for iPhone and iPod touch application, a user can read a few pages of a book on the Kindle or its newer version, Kindle 2, and continue reading from where they left off on the iPhone or iPod Touch.
If you're a Kindle owner and you're reading your book on your Kindle and you leave your Kindle at your home ... you can actually use your iPhone or iPod Touch and it will pick up where you left off. It's a great companion, Amazon Chief Financial Officer Tom Szkutak said at an investors' conference.
Users can shop for books on their Kindle or online and wirelessly transfer them to their iPhone or iPod Touch. They will also be able to access all previously purchased Kindle books, adjust the text size or add bookmarks.
In a review of the new software, Nicole Lee of CNET said a serious downside was that consumers cannot buy Kindle e-books directly but have to go through a Web browser to the Kindle store. Moreover, the application only supports books, but not newspapers or magazines, he added.
Moody's upgraded Amazon's senior subordinated notes to Baa3 from Ba2 and raised its senior unsecured shelf rating to (P)Baa2 from (P)Ba1.
Amazon shares rose $3.11, or 5.04 percent, to $64.81 on Nasdaq.
(Reporting by Alexandria Sage; Additional reporting by Aarthi Sivaraman; Editing by Richard Chang)