In February, a Kindle sales theory was proposed by Citi Investment Research (PDF) using Sprint activation numbers.

Thanks to CIR Telco Analyst Mike Rollins, we have uncovered a key disclosure in Sprint’s September Quarter 10Q filing.  P. 42 in the Wholesale, Affiliate and Other Revenue sector.  Here’s the text:

“Certain wholesale devices are activated on the network by our wholesale partners prior to selling the device to the end customer, which resulted in approximately 210,000 such additions being activated on our network during the third quarter 2008.”

Additional sleuthing on Mike Rollins’ part suggests that there could have been 100,000 wholesale device activations in each Q1 and Q2 of ’08, and our combined view is that these wholesale device activations refer specifically to the Kindle.  Tie these points together with the knowledge that Amazon fully sold out its Kindle supply by mid-November, and it’s hard to escape the conclusion that Amazon sold approximately 500,000 Kindles in 2008.

I just couldn’t understand how one would think that all 210K were specifically Kindle related. I wrote to Sprint Investor Relations asking a very simple question.

Can you confirm that the wholesale device activations referenced are solely Kindle?

The other day, after a bit of persistence, I was able to get the following response from Sprint Investor Relations.

We cannot offer much additional commentary on this topic.  I can tell you that there are other data centric devices included in our reported wholesale and affiliate sub count than the Amazon Kindle.  Neither Amazon nor Sprint provides details on the number of kindle devices.  The comment below about the 210k devices at the end of 3Q08 references those that were activated but not yet in the hands of an end user.

This clearly states that the activations do not specifically relate to Kindle. However, it doesn’t provide any insight as to what percentage may be Kindle related.

The later comment regarding the device activations is odd. My question did not address this in any way, shape or form. Instead, this is a … spontaneous additional comment.

Perhaps it is a simple clarification but in some ways it feels like activations are divorced from the sales cycle. That the activations could be a supply number (for all devices) instead of being mapped to sales. Please share your thoughts here since I find the subject murky.

However, in light of this data, I believe the 500,000 figure is generous. I don’t blame Citi for trying to construct a sales volume theory. It is Amazon and Jeff Bezos who are to blame. Speaking to shareholders at the Seattle Art Museum, Bezos had this to say about Kindle sales.

I’m not sure we will ever reveal all the numbers. Our point of view is that there is a competitive advantage to keeping the numbers close. You may have to remain curious on that point and I certainly understand the curiosity, especially since I look at the numbers so avidly every morning.

I don’t find this a compelling argument and can only surmise that sales are weak. Otherwise, the impact Kindle sales would have on the business would be large enough to meet the materiality definition, and thereby be necessary to any shareholder report.

I understand that Amazon is in a fight with Google for the future of digital books and they want to play their hand like they’re holding pocket aces. But the player who consistently over bets is usually bluffing.

A new partnership between Kirtas Technologies and the University of Pennsylvania Libraries allows users to request and purchase a digitized version of nearly any out-of-copyright book from the Penn Library collection.

What makes this initiative unique is that the books can be offered for sale before they are ever digitized, so there is no up-front printing, production or storage cost.

Indeed, that is interesting. Here’s how they say it works.

The desired book will be pulled from Penn’s shelves, digitized, processed by Kirtas for optimal reading and printing, and a newly-printed copy will be shipped to the initiator. Or, the customer can purchase access to an online-only version of the book. Once the book has been digitized, it is returned undamaged to the library shelf.

Google took some flak when people realized that the scanning of new books often entailed chopping the book apart (disbinding is the politically correct term) to aid in the digitizing process. Lets be clear though, Google doesn’t do this with the books that come from library collections.

The landscape for digitization is relatively small. Kirtas seemed to have the inside track when they partnered with Microsoft in their Live Search Books and Live Search Academic projects. However, both of the aforementioned projects were shuttered last year, leaving Kirtas in a David versus Goliath position with Google.

Mind you, there are other digitizing companies out there. Julian Ball, Manager of the BOPCRIS Digitisation Centre based within the Hartley Library at the University of Southampton, reviewed the four competing scanners at a public exhibition in Munich.

The wrinkle is that many digitizing experts seem to believe Google’s scanning technique, a proprietary process, is suboptimal. Some claim the scans are passable, while others believe rescanning might be necessary in some instances. This might not mean a lot to the everyman, but it’s a hot topic for historians and librarians.

Think of it this way, you’d have wanted the monks with the best penmanship to help preserve texts through the dark ages, right?

Here’s a look at the Kirtas 2400 Scanner.

For irony go watch the Kirtas Book Digitization Tour video.

I might give Kirtas Books a spin and you should too if you want an ‘analog’ book or a digital book that is in the public domain and available at the University of Pennsylvania Library.

Overall, I’m happy to see more momentum behind the digitization of books. I fully believe Google, or gBooks as I’ve come to call it, has the inside track on this business, and by a wide margin, over everyone else including Amazon via Kindle. More competition can only be good at this stage, leading to innovation and better products.

On Thursday Google announced new mobile editions of 1.5 million public domain books. iPhone and Android users now have access to five times the number of titles currently available on Kindle.

While these books were already available on Google Book Search, these new mobile editions are optimized to be read on a small screen.

The timing of this announcement comes 4 days before the likely unveiling on the Kindle 2. Coincidence? I think not.

Of course, the titles currently available through Google Books are different from those on Kindle. We’re talking public domain versus the front list of bestsellers. But how long is that going to last?

Last month I wrote about the future of gBooks which is contingent on the blessing of the settlement agreement with the Authors Guild and Association of American Publishers.

Once this agreement has been approved, you’ll be able to purchase full online access to millions of books. This means you can read an entire book from any Internet-connected computer, simply by logging in to your Book Search account, and it will remain on your electronic bookshelf, so you can come back and access it whenever you want in the future.

Add it up. Sometime this year Google will have well over 3 million titles available and optimized for the small screen. In addition, authors and publishers have a clear and decent revenue share (63%) with the search giant.

What makes anyone think Google will stop with public domain and out-of-print books?

Authors and publishers would welcome an alternative to the increasingly combative Amazon. Last year Amazon put the squeeze to large publishers and Print On Demand (POD) publishers. Is it any wonder that Amazon couldn’t convince textbook publishers to play ball with a textbook Kindle.

Google will have public domain and out-of-print books available to deliver to a built-in base of customers. That’s right, there’s no new device to purchase! Particularly not a single-use device with a $359 price tag.

That larger base of customers is going to look very attractive to publishers. How long until they agree to sell front list bestsellers through Google?

Gadget fans will clearly swoon over Kindle 2 but the real story is the growing competition between Google and Amazon in the digital book arena. The timing of Google’s mobile version is a shot over Amazon’s bow. The industry should take notice and the Internati should be looking beyond the hype.

The future of ebooks may in fact by gBooks. What’s gBooks? It’s Google’s iTunes like interface for books.

No, it doesn’t exist yet but the settlement agreement with the Authors Guild and the Association of American Publishers makes this a likely scenario.

Once this agreement has been approved, you’ll be able to purchase full online access to millions of books. This means you can read an entire book from any Internet-connected computer, simply by logging in to your Book Search account, and it will remain on your electronic bookshelf, so you can come back and access it whenever you want in the future.

Millions of books. That’s right. In one fell swoop Google will have five to ten times the titles currently available on Kindle.

Out-of-print books aren’t actively being published or sold, so the only way to procure one is to track it down in a library or used bookstore. When this agreement is approved, every out-of-print book that we digitize will become available online for preview and purchase, unless its author or publisher chooses to “turn off” that title. We believe it will be a tremendous boon to the publishing industry to enable authors and publishers to earn money from volumes they might have thought were gone forever from the marketplace.

Out-of-print books is the long-tail of the book industry and it makes perfect sense for Google to enable this part of the market. Google has been scanning books for years through the Google Library Project. In 2008, Microsoft finally ceded this space, shuttering its own Live Search Books and Live Search Academic projects. The only real competitor that remains is Amazon.

Some of you may be wondering why I’m writing about this now. It’s not breaking news, right? Here’s the thing. In the last year Google has finally determined that they need to focus and find new revenue streams, particularly with a maturing search market. Here’s a quick listing of Google projects or properties that have recently been closed.

• Lively
• Google Video Uploads
• Google Notebook
• Jaiku
• Dodgeball
• Google Catalog Search

The latter might make you think that Google is abandoning books. But a quick look at the farewell post shows the exact opposite.

It was a great experiment. Nonetheless, in recent years, Catalog Search hasn’t been as popular as some of our other products. So tomorrow, we’re bidding it a fond farewell and focusing our efforts to bring more and more types of offline information such as magazines, newspapers and of course, books, online.

And of course, books.

That’s right, Google is very keen on books and not just because it is part of their mission to help organize information. It’s about revenue. The revenue share on consumer sales under the agreement will be 37% for Google and 63% for the publishers and/or authors. Frankly, this seems like a win for both sides.

Unlike Amazon, I doubt Google is going to restrict how and where these books are read. It could be on your desktop or downloaded to your phone. You might read it on Stanza or perhaps on the new G1.

Google sees dollars in books and has been developing book related projects for five or more years. Here’s a prime example. Anyone poking at Google Base will see that it was built with specific book related fields. I happened to have a front row seat for the transition from Froogle to Google Base and it was obvious that books was a top priority.

Now, what do you think happens when publishers begin to see more dollars from their backlist titles via gBooks versus their frontlist titles via Kindle?

gBooks might not be as sexy as Kindle. It’s not a gadget that can be endlessly debated. Instead gBooks is the quiet tropical depression off the coast of Florida that could quickly turn into a hurricane.

The New York Times recently did a piece on the rise in popularity of ebooks. The centerpiece of the article was the popularity of Amazon’s Kindle.

It is difficult to quantify the success of the Kindle, since Amazon will not disclose how many it has sold and analysts’ estimates vary widely. Peter Hildick-Smith, president of the Codex Group, a book market research company, said he believed Amazon had sold as many as 260,000 units through the beginning of October, before Ms. Winfrey’s endorsement. Others say the number could be as high as a million.

Really?! (I sound like Amy Poehler and Seth Meyers on SNL.)

Earlier this year a number of Internati were throwing around sales numbers for Kindle. In particular, TechCrunch and Mark Mahaney came out with projections and models. 240,000 units sold! That was the meme making its way around the Internet. Amazon quickly responded to these figures and deemed the Kindle estimates ‘extremely high’. Not inaccurate or slightly off base but ‘extremely high’.

But that doesn’t stop The New York Times from using figures between 260,000 and 1 million. 1 million! Really?!

If that were the case I’m guessing Amazon would have been a lot more vocal about the numbers. Heck, they might have been forced to if it had reached a material threshold.

Perhaps The New York Times has some insight we don’t since they are a premier partner, showcased as one of the periodicals that can be delivered via Kindle. Maybe they’ve seen huge subscription numbers that make them certain that Amazon is just sandbagging and keeping expectations in check.

New York Times Co. executives said today during the company’s second-quarter earnings call that the newspaper has sold a “small amount” of subscriptions on the Kindle.

Really?! Yup, that’s from a July 23 Bloomberg article.

So, Amazon won’t divulge anything of substance except to say that the projections being thrown around are ‘extremely high’. On the other side we have an army of affiliates (people with an abiding interest in the success of the product) promoting the fabulous merits of Kindle far and wide.

Well, maybe doing some research on search trends will show this amazing Kindle popularity.

Really?! Well, that Oprah endorsement certainly helped but … it’s still behind the Zune and oh … Mushroom. Now, perhaps Mushroom isn’t fair. Maybe you think there are a bunch of college kids looking up mushrooms for various and sundry reasons.

Really!? So, Oprah got Kindle just above Towel. OMG! Stop the presses!

Where do you suppose these searches are being performed? New York? Illinois? California?

Highest search volume index? Washington. Really!? Sure, Seattle is one of the most literate cities but … it’s also the headquarters for Amazon.

So, despite no actual sales data, previous statements that projected sales numbers were ‘extremely high’, a financial bias from most promoters and limited evidence of popularity via search The New York Times jumps on the Kindle bandwagon.

‘Journalism’ around Kindle has been nonexistent.

A more interesting story surrounding Kindle would be looking at how Amazon has performed as a hardware manufacturer. This is a very big change for Amazon and is, in my opinion, outside of their comfort zone. Think about your local mall deciding it wanted to start selling widgets. How do you think they’d fare?

Years ago when I first heard rumblings of Amazon building their own reader, the scuttlebutt was that they were finding it difficult to secure materials. Fast forward and we’ve seen Amazon twice go out of stock of Kindle. Most assumed that demand had simply outstripped supply.

Really?! We all know what happens when you assume.