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Wal-Mart escalates war with Amazon; bans Kindle

Wal-Mart sells iPads and a number of other tablets, but won't be selling Amazon Kindles after existing inventory runs out, reports CNBC's Julia Boorstin.

Sparks are flying between Wal-Mart and Amazon.com. Earlier this week, Wal-Mart said it would stop carrying Amazon’s Kindle e-readers, two weeks after the online bookseller announced a new line of the devices.

Wal-Mart characterized the move as a “business decision,” and will continue to sell tablets and e-readers from other manufacturers, including Apple’s iPad, according to Reuters.

Singling out Amazon was a defensive move, analysts say.

“This is a retail war and Wal-Mart and Amazon are absolutely fighting for the same shopper's wallet,” Sucharita Mulpuru, an analyst with Forrester Research, said via email. “Wal-Mart doesn't need to be helping a rival to this end,” she said.

Amazon sells much more than just books these days, and starting last year with the Kindle Fire, customers have been able to browse and buy Amazon’s entire virtual warehouse directly from their devices.

“You might say it’s looking at Amazon as more of a direct competitor,” said Budd Bugatch, an analyst at Raymond James Financial. Faced with this prospect, Bugatch said the retailer could have concluded, “Why would I want to help facilitate that?”

When it comes to online shopping, the country’s biggest retailer is the underdog in the competition with Amazon. This is especially true in the fast-growing mobile category, data from comScore Inc. showed. Amazon’s family of sites is the top retail destination among smartphone users by a wide margin, drawing 49.6 unique monthly visitors in July. Wal-Mart trailed behind Amazon, as well as Apple and eBay, with 16.3 million visitors.

“Relative to their size, their online business is not material,” Bugatch said. “It’s a focus of management to improve and to grow the online business.”

Mulpuru called discontinuing the Kindle “a dispensing of any pretense that Wal-Mart is too big to worry about Amazon.”

As for Amazon, analysts don’t think Wal-Mart’s Kindle ban will affect it significantly. “It’s always better to have more distribution than less,” said Ken Sena, an analyst at Evercore Partners. He added, though, that any impact on sales would be “incremental.”

“I think for anybody who wants to buy a Kindle, it’s still very easy.”

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