This is an interesting move. Wal-Mart and Target have both decided that Amazon is a big enough retail threat that they do not want to empower them by selling Kindles in their stores. What’s funny is that I think this is the wrong competitive move — I get why they think it is right, but I think they made the wrong call.

Aside from anything Apple sells, I think the Kindle line takes second place on the most desirable gadget list. Both because non-Apple fans want them, and because they better fit a parents budget than Apple gear. Either way, let’s just say holiday demand for Kindles is real, and very large.

If we accept that as fact, then it naturally follows that many will need and want to buy the devices. Where do they go? They can’t go to Wal-Mart, or Target — guess they go to Amazon.com — oh and while they are on Amazon.com, why not conveniently tick-off a few other gifts and save the trip to the store. “What’s this Prime thing? Of free movies and free shipping? That will save me some money this holiday season, purchased.”

You see what will happen? We just made a loyal Amazon customer.

Instead of selling your competitors low-margin devices, and then selling *your* customer some other holiday goodies — you just sent your customer directly to your competitor and showed them how much less crowded online shopping is.

This only works if the Kindles are actually coveted — and I think they are — otherwise people would just buy whatever else Target has. So my best guess is that Wal-Mart and Target think they can get away with this by directing people to equivalent devices — let’s see how that works out for them.