Seattle-based Amazon rolled out the free program on Wednesday, bringing several Kindle functions to the Apple gadgets smaller screens. The application can be downloaded from Apples online application store and lets iPhone and iPod Touch users read the same electronic books that Kindle owners can buy on Amazon.com.

The applications release comes a few weeks after Amazon unveiled the second-generation Kindle. The company has not released sales figures for the device, which it began selling in late 2007, but Citi Investment Research analyst Mark Mahaney recently estimated that the company sold 500,000 Kindles in 2008.

Regardless of how many Kindles have been snapped up, the availability of the Kindle program on the iPhone and iPod gives Amazon millions more potential e-book buyers – 4.3 million 3G iPhones alone were sold in the U.S. in 2008.

And while Amazon hopes that the application will translate into increased sales for both e-books and the Kindle device, Creative Strategies Inc. tech analyst Tim Bajarin said he believes the former is the more important result in extending Kindle capabilities to Apples products.

Amazon currently has 240,000 books available for the Kindle, and its library will grow. The more e-books you have, the more people you need to buy them, he said.

“If youve only limited it to a Kindle (device) audience, you dont have exponential growth,” he said.

He thinks the application will have a “significant impact” on people discovering e-books.

Stephen Ju, an analyst with RBC Capital Markets, thinks Amazon simply wants to sell books.

“I dont think they care if you dont buy a Kindle if they can sell you a book. I think thats what they really care about at the end of the day,” he said.

Thats not to say that analysts think the application will cannibalize sales of the Kindle device. Bajarin said the smaller screen is a good way to introduce consumers to e-books, but thinks serious readers will buy the Kindle as the economy improves.

And in its current form, the application is not a game changer for Amazon, Ju said, in part because it lacks an e-book purchasing feature. Users must access the Web browser on their iPhone, iPod or computer to buy the books. But if the company adds this, he thinks it will set it apart from other e-book applications that are currently available for the iPhone and iPod Touch, like Lexycles Stanza e-book reader.

Stanza allows users to read e-books in the “epub” format, which is an open standard supported by the International Digital Publishing Forum that many publishers use to create e-book files. The Kindle does not support the format, but Sony Corp.s competing Reader device – which sells for $300 or $400, depending on the model – does.

Publisher Simon & Schuster also said the programs release as a plus. Some of the companys e-books are already available on the iPhone and iPod through Stanza and a program by ScrollMotion called Iceberg.

Ellie Hirschhorn, head of digital operations, said the publisher is rooting for various platforms that get e-books to readers, including the Kindle device, Sonys Reader and Simon & Schusters own method of direct distribution through its Web site and other online retailers.

“The more choice, the more ubiquitous, the more content readers have access to, the better for the ecosystem,” she said.

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