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Critics said the Kindle would never be able to compete with Apple, but Amazon's handheld e-reader is a runaway hit. The company sold 7 million Kindles last year, analysts estimate, making it Amazon's bestselling product. That's fewer than Apple's 15 million iPads, but the Kindle has allowed Amazon to stake out an early lead in e-books: Since 2010, it has sold three times as many e-books as hardcovers, and it dominates the fast-growing new market. "By creating the hardware, they almost created the industry," says Morgan Stanley analyst Scott Devitt.

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Last updated February 24 2011: 5:40 AM ET
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