New clues suggest that Amazon’s Kindle e-reader business have been suffering more than has been letting on — with E Ink Holdings saying that its “major customer” ordered “almost nothing” in the first quarter after overestimating its sales during the holiday season.

The theory from investor Paolo Santos is that the Kindle Fire is cannibalizing traditional Kindle sales.

As explained by ReadWriteWeb, it’s not a good sign for the future of traditional e-readers.

Maybe Harry Potter can help? Amazon.com this morning made a major addition to its Kindle Owners’ Lending Library, the program that lets Amazon Prime subscribers who own Kindle devices check out a book a month for no extra charge beyond the existing $79/year Amazon Prime subscription fee.

The Kindle Owners’ Lending Library — separate from the public library Kindle book lending program — part of a broader effort by Amazon to boost the value of the Prime memberships and Kindle devices.

The program requires people to actually own Kindle devices (including the e-readers and the Kindle Fire tablet) and doesn’t work with Kindle apps on non-Amazon devices.

“We’re absolutely delighted to have reached this agreement with Pottermore. This is the kind of significant investment in the Kindle ecosystem that we’ll continue to make on behalf of Kindle owners,” said Amazon CEO Jeff Bezos in the press release announcing the news. “Over a year, borrowing the Harry Potter books, plus a handful of additional titles, can alone be worth more than the $79 cost of Prime or a Kindle.”

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