Amazon shares rose by 4% when an analyst noted that more customers were opting for Amazon's Kindle E-Book reader.

According to Morgan Stanley's Scott Devitt, a leading Internet and e-commerce analyst, the market for e-books and its readers is bigger than previously believed to be. Currently there is a boom of e-book readers and tablets available at competitive rates.

Among all the competition, Devitt reveals Amazon is reaping the most benefits and one of the preferred brands when it comes to purchasing books, e-books and also e-book readers.

The analyst revealed that approximately 859 million units of e-books were sold in 2012, which is nearly 200 million above the previous year's sales, which was estimated to be 567 million. Having a hold on nearly 45% of the worldwide market, Amazon was likely to have sold 383 million e-books last year, which was more than 100 million of the estimated 252 million sales.

Amazon has established a new strategy where in they sell mobile devices at the regular cost and make a profit on digital products the customer buys to use on the gadget like videos, e-books, apps, music and games.

According to Devitt, the strategy seems to be working well for the company especially with its Kindle devices and e-books.

"We initially assumed that early adopters of eReader devices would be avid readers and, therefore, the marginal buyer would read less," Devitt wrote.

Amazon presented some company data recently that revealed that customers who bought their Kindle devices in 2011, purchased and read e-books 4.6 times more than when he had not purchased the device.

"The Kindle franchise is a profit pool that subsidizes investments in other growth initiatives," Devitt wrote.