Kindle Wants to Know You Better

There are still plenty of diehard bibliophiles out there swearing off e-readers. They crave the trip to the bookstore, the scent of a freshly purchased read, and the crisp turn of actual pages.

Amazon.com's (Nasdaq: AMZN) market-leading Kindle isn't about to fill those voids. It markets convenience, portability, and more often than not value in its digital publications. However, the world's leading online retailer is making headway in making the Kindle more social.

A key feature of its latest software update is the ability to share public notes. The Kindle has allowed owners to mark up their digital books with notes and highlighted passages for years. However, now it's going social. Owners have the option of sharing their notes with a select circle of friends, family, and colleagues or the entire Kindle community.

This may not seem like a big deal, but imagine a book's author -- or even a popular critic -- making annotations public? You're already seeing more Kindle and Barnes & Noble (NYSE: BKS) Nook owners invade your monthly book club. Now let's dream up a scenario where your book club members are sharing notes as they go through the book.

In another social win, Amazon's Kindle hopes to go viral with a neat touch at the end of every book. There's now a seamless way to rate the book, post thoughts on within a social group, and receive new recommendations.

That's not all. In a move that is long overdue to those who are reading along with folks reading hardcovers and paperbacks, Kindle is now looking to match up its e-reader page numbers with those in the print editions.  

This software update is only available to owners of the latest generation of Kindle readers. Those who paid more than twice as much for older inferior models are just out of luck as early adopters.

They can upgrade, of course. Amazon wouldn't mind that one bit, even though its margins are taking it on the chin. The e-tailer has sold "millions" of the latest Kindle model, and it's showing. Net sales soared 36% in its latest quarter, but net margins contracted to the point where earnings climbed by a mere 8%. Amazon already braced shareholders for a dip in operating profits during the current quarter.

Amazon's willing to give up near-term pain to secure market share leadership in the long run. It hasn't had a problem standing out against Barnes & Noble, Sony (NYSE: SNE), and Borders (NYSE: BGP) but now it has to stare down tablets since Apple's (Nasdaq: AAPL) iPad hit the market 10 months ago.

The latest update will help. More Kindle owners will be providing free publicity for the device through book-rating posts on social networks. The value of Kindle books will only grow as access to desirable annotations becomes more widespread.

Amazon's doing this right, even if bottom-line watchers would sorely disagree.

Have you recently become an e-reader convert? Share your thoughts in the comment box below.