I'm also curious about what this would to do Amazon's business model, but due to access to the Amazon store being built into the Kindle I can see that a lot of customers would just buy from there because of convenience. The ability to browse the online store and send to the Kindle directly makes shopping (too) easy. Any books you get from other places have to be transferred over through USB (as far as I know), so that extra step may stop some people.

I was a bit daunted by the lack of ePub when I first started shopping for an eReader. I actually bought the Sony PRS300 a year and a half ago because I didn't like the idea of being locked into Amazonworld. Once I got going though I realised that with Calibre I can convert one file type to another with relative ease, and now that I have the Kindle, I've set it up so that as soon as I add a book to Calibre, it will strip the DRM off for me. Now that I've got this figured out I feel comfortable shopping at whoever has the best prices. I see a lot of people that refuse to shop at places with DRM but I have a hard time with that because I read a lot of mainstream fiction, and don't know where to find it otherwise (some publishers still put DRM on too).

I'm probably just dreaming but it would be nice if Amazon realised they would have the market advantage due to the size of their store if they would just make it easy for everyone to shop there (and not just Kindle owners).