The retailer is dropping the popular brand of e-readers just as a deal with Apple heats up.
Target Corp. confirmed Wednesday that it will stop selling Amazon Kindle e-readers, a move analysts say was driven by Amazon's growing presence in general retail sales.
Molly Snyder, a Target spokeswoman, characterized the decision as a regular review of Target's marketing strategy, and declined to say more about why Target was dropping the Kindle. Amazon representatives didn't return a phone call.
But analysts offered several theories as to why Target is dropping the popular device. Most point to the fact that Amazon is being seen as more of a rival than a vendor for Target.
"Why should Target facilitate the revenues of what is now a major competitor?" asked Michael Keara, an analyst who follows Target for Morningstar in Chicago.
Indeed, Amazon has been a formidable opponent to traditional brick-and-mortar retailers in recent years. Cost-conscious consumers would rather window shop for electronics at stores like Target, then buy them online for a lower price.
"Amazon has been one of the most disruptive forces," said R.J. Hottovy, a Morningstar analyst who follows Amazon. "Store traffic and profitability have suffered at the mass merchants, particularly at big-box specialty retailers."
Amazon's new Kindle Fire tablet even encourages consumers to purchase goods online by offering discounts and faster shipping.
Target has been selling Kindle e-readers since June 2010. In late November, the Minneapolis-based retailer said the Kindle was the best-selling tablet in its stores on Black Friday.
Target is phasing out the products this spring. It will still sell two Kindle competitors: the Nook by Barnes & Noble and the iPad by Apple.
Analysts also say that Target's recent deal to put Apple retail operations inside 25 of its stores may have caused Target to drop products from Amazon. Apple is a rival of Amazon in the sale of music, books and tablet computers.
"Probably something in that Target-Apple partnership led to this decision," said Hottovy said.
A recent study of the tablet computer market by ComScore of Reston, Va., suggests that Amazon may have become a bigger worry to Apple because of brisk sales of the Kindle Fire tablet. While the iPad is by far the leader in the tablet computer market, Amazon's Kindle Fire tablet is now the market leader among tablets that use Google's Android operating system, the study said.
Another theory advanced by online market watchers was that Target might have eliminated the Kindle because of Microsoft's new investment in the Nook, the Barnes & Noble e-reader which Target continues to sell. Earlier this week, Microsoft bought a 17.6 percent stake in the Nook business for $300 million.
Steve Alexander 612-673-4553