Posted by Sandy Hutchens

Internet retailer Amazon.com may need to write a new chapter for the Kindle in the face of fierce competition from Apple’s iPad.

Since Apple announced on Jan. 27 that it would sell a versatile tablet computer that lets users read electronic books and perform a range of other computing tasks, analysts have said the iPad would likely take a bite out of sales of dedicated e-book readers such as Amazon’s popular Kindle. In light of Apple’s Apr. 8 announcement that it sold 450,000 iPads in less than a week, Wall Street analysts are already slicing their forecasts for Kindle sales.

Charlie Wolf, a senior analyst at Needham & Co. who has a “buy” rating on Apple shares, on Apr. 9 cut his forecast for Kindle sales this year, settling on a range from 2.5 million to 3 million units, in place of a previous forecast of 3.6 million units. Wolf estimates that Amazon sold 2.2 million Kindles in 2009. “It’s not a compelling product,” he says of the Kindle, because Apple’s iPad offers more features, such as the ability to play video, plus a more compelling design.

Piper Jaffray analyst Gene Munster, who has an “overweight” rating on Amazon shares, cut his 2010 forecast for Kindle sales by 400,000 units, to 3.45 million. Amazon’s top-of-the-line Kindle DX, which is designed to let users read e-books on a black-and-white screen, is selling for $489, just $10 less than Apple’s least-expensive iPad.

The iPad starts at $499 for a model with 16 gigabytes of storage, a color touchscreen, and a library of 60,000 e-books. It also affords users the ability to watch videos, listen to music, and run a wide variety of applications. “No one in their right mind is going to buy a Kindle DX,” says Munster.