Though Amazon.com won't say how many units it has sold, its Kindle e-reader has been a tremendous success for the e-commerce giant. Some analysts estimate Amazon sold 3 million before this year, and will double that total in 2010. Despite some predictions that the iPad and other Web-oriented tablets would start the Kindle doom clock ticking, its continued popularity bodes well for the future of single-purpose long-form reading devices.

The new third-generation Kindle only makes that future brighter. All its basic virtues—instant downloading from an abundantly stocked store, light weight, ability to read in sunlight—are still there, with significant improvements in text readability, physical design, and battery life. And the Kindle's march towards an inevitable double-digit price point continues, with a new, Wi-Fi only version priced at $139, fifty dollars cheaper than the standard 3G wireless version (which also adds Wi-Fi.) Both versions begin shipping on August 27, but are back-ordered well into September.

Compared to the 2007 original (whose weird shape was the butt of cruel jokes from design snobs) the new Kindle is so svelte and understated that you wonder whether Amazon hired Apple's Jony Ive for a brief consultancy. Weighing in at 8.7 ounces—barely half the weight of the one-pound paperback version of The Girl with the Dragon Tattoo—it's less than a third of an inch thick, cutting an even tinier profile than an iPhone 4. The color is now graphite, which supposedly heightens the text contrast. (The 3G connected higher-end version can still be ordered in white.)

No matter what the color of the plastic, the denser e-ink on the new Kindle is going to make a lot of previous Kindle owners jealous. Amazon says it's a 50 percent boost in contrast; stats aside, the clarity of text makes what was a good reading device even better, largely mitigating the grayish background of the screen display. The new Kindle also offers more flexibility in font size, spacing and words per line. The other reading improvement that Amazon boasts about—a 20 percent reduction in the brief blackout that occurs when you turn the virtual page of an e-book—is less significant. After hours of Kindle use, I have come to hardly notice that blackout anyway (though many novices are bugged by it). The one feature I do miss—and actually exists on the iPad Kindle app—is a slider that allows you quickly "thumb" through the pages of text to an approximate area you want to find. (When it comes to reading publications with more complicated layouts, like newspapers or magazines, though, touch-screen, backlit tablet computers still have the edge.)

Speaking of navigation, each generation of Kindle has discarded the previous interface hardware for selecting and getting around your reading material. This Kindle discards the stubby joystick for a "five way" display that's a select button surrounded by directional keys to help with cursor movements. Also, the "menu" and "home" buttons have been moved from the side panels to the keyboard, leaving just slim page-forward and page-back buttons on both sides of the unit. Big win. For the first time, you can grab a Kindle without worrying about accidentally pressing a button that loses your place. Unfortunately, Amazon still hasn't gotten it exactly right—the "up" and "down" movements on the 5-way button are too close to the "menu" and "back" buttons and if you're not careful, you can easily hit them by mistake. Maybe the fourth generation will be the charm.

Since I only had my new Kindle for less than a week, I couldn't test Amazon's claim that the battery would last ten days with the 3G on, and a month with the radio shut off. (The low-end version claims 3 weeks with the Wi-Fi on.) But even if the specs come close, that seems like a nice boost to those who want to travel without worrying about keeping their charger close. There's twice as much on board storage from the previous gen Kindle, enough for 3500 books. And the basic Kindle finally has the native PDF support of its bigger brother, the Kindle DX.

Should you get the low-end Wi-Fi version for $139 or the one with free 3G mobile connectivity for fifty bucks more? I didn't get a chance to test the low-end Kindle, but after using the Wi-Fi on the deluxe version, I found it simple to access and use my password-protected network. The Amazon store (and other web pages) loaded a little more nimbly via Wi-Fi and it seemed to me that books downloaded more quickly, too. Basically, unless you plan to use your Kindle in a lot of situations where you dont have Wi-Fi access, or are traveling internationally (Kindle's AT&T 3G broadband works overseas for free), I think that the lower-end version would be fine. Even though Amazon has sped up its web browser (buried under the "experimental" menu option) it's still monochromatic, sluggish, and awkward compared to a computer, iPad, or even your smart phone.

Amazon is also offering a new case for the Kindle with a built-in book light that draws power from the device itself. Snaking above the page, the light does a decent job, but the case adds considerably to the bulk to the Kindle, which is really nice to use in its naked form. At $60, the case is expensive in comparison to the gadget. If Kindle prices keep going down, and the price of a cover keeps inching up, will users soon pay more to shield the Kindle than they do to buy it?

Even though it's not part of the new Kindle launch, I should mention a feature that Amazon rolled out in the last operating system upgrade. You may now come across passages in a downloaded book that have been highlighted by other users. (You have the option of turning it off.) You can also access a list of such "meaningful passages" through a menu item. Though this seems spooky the first time you see it, I think it's a hint of how reading itself may be creeping towards a social experience.

The subtle implementation of this feature shows Amazon's awareness that it is at the forefront of a movement that may have powerful and unexpected consequences on the centuries-old practice of reading. But the company's primary mission with Kindle is to establish it as something readers will want to carry around with them, even in the emerging age of tablet computers. The third generation Kindle, with its aggressive pricing and its improved design and features, does that job nicely.

WIRED Amazon keeps pace with a more competitive e-reading marketplace with a smaller device, more readable text, yet and another improved hardware interface. $139 price for Wi-Fi version will open the door for multi-Kindle families. Battery life is long enough for space shuttle missions.

TIRED Still the same DRM, no touch-screen navigation, the book-light case is too costly. Only those with tiniest fingers will avoid hitting the "back" button when moving the cursor down. Interface for newspaper and magazines still clunky.