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Wireless E-Readers, Only for Some

Highlighting another hit product most consumer electronics retailers won’t be selling this Christmas, announced its Kindle e-reader is its No. 1 selling product in units and dollars across all categories, astonishing Wall Street analysts.

And arguably the coolest e-reader to date, the Nook from Barnes & Noble, isn’t going to be offered beyond its own doors and Web site, so make that two key e-readers now out of reach.

For the merchandiser wanting to sell a new wireless e-reader, unless he is seated in a Minn. office working for Best Buy, his only hope is Sony. (Best Buy is the sole dealer slated to carry a wireless e-reader from iRex Technologies this year).

And Sony is no sure bet. The company hasn’t yet announced which retailers will be receiving its 3G wireless Daily Edition in time for Christmas, so it might be Walmart or everyman, but I personally wouldn’t bet on the latter.

Sony’s Sony Digital Reading Division president, Steve Haber, said Sony will announce the retail plan for the wireless Daily Edition shortly. But even then, there will be the inevitable shortages.

Sony is already in backorder on its non-wireless Pocket and Touch Editions, and even the Kindle has suffered severe shortages reported over the last two holiday seasons.

Haber said Sony is trying to produce as many Daily Editions as possible, adding, “We expect to fill demand for both the Pocket and Touch.  Though we had high expectations, they are exceeding expectations … We ship and then they go on backorder; it could be a week, a day or two weeks. Both are doing extremely well.”

To its credit Sony has vastly expanded its e-reader retail distribution from 3,500 outlets last year to 9,000 this Christmas. It is installing video demo displays at all Best Buy stores and at Borders, Target and Walmart. It is running an ad campaign that includes TV spots featuring pop star Justin Timberlake.

Sony’s lineup also gives retailers a couple of features not on the Kindle (but still on the Nook). One is a touch screen with finger swipes and tapping and the ability to highlight and add notes — a must-have feature for students. Its e-readers are also compatible with e-books from other e-bookstores.

One more hope for retailers wishing to carry a wireless e-reader may come from Aztak who may sneak in a 3G and/or Wi-Fi model before the end of the year.

Or retailers may be left selling non-wireless models this Christmas.

As a tip for those attending CES, bring an extra brief case for brochures because TWICE hears there will be a slew of new e–readers and new entrants.

Many hit product categories tend to stay in high growth mode for only one or two seasons: think GPS and digital picture frames. E-readers are still early in their growth cycle, but we can be sure the margins aren’t going to wait long to shrink to nothing. Already Forrester Research analyst Sarah Rotman Epps speculates in a blog that Nook margins are razor sharp if they exist at all.

I wouldn’t want to be a Joe’s Appliances selling e-readers as Amazon and Barnes & Noble escalate a price war in hopes of ushering the bookstores into the e-book age.

So retailers, good luck.