One of the on-going criticisms of Amazon's Kindle has been that it is a closed system. If you don't have a Kindle, you can't get access to the electronic versions of books that Amazon sells.
While that is still true, your options just got a little bit broader. As of today you can get an iPhone/iPod Touch application that will allow you to read Kindle books on your Apple device. The app is available from iTunes now.
You won't be able to buy books directly from the Kindle store, but given that both devices include a web browser that shouldn't be too great an issue. The app does support Whispersync which will sync your ebooks between your iPhone and a Kindle, including bookmarks. The idea is that you can stop reading a book on one device and seamlessly pick it up from where you left off on the other.
Kindle for iPhone isn't the first e-book reader for the device; Lexcycle's Stanza is a popular iPhone app that claims to offer access to 100,000 books and supports a variety of ebook formats. Of course since both apps are free this isn't going to be an either/or decision; avid readers will probably have both apps installed.
Over the past few years there has been some speculation that Apple would add ebooks (in a big way) to the music and video offerings of iTunes. Some pundits suggest that this is their answer to that speculation, and it makes a certain amount of sense. At the same time, one wonders how much Apple is making off this deal. Sure, it's another reason to own an iPhone (or iPod Touch) but since you aren't purchasing the books through iTunes, it won't be a direct revenue stream for Apple.
My private hope (based, I'll admit, primarily on wishful thinking) has always been that Apple retired the iBook line of portables so it could later recycle the name in the form of an ebook reader.
As for Amazon, this is a nice first step towards broadening their base of ebook customers. It will be interesting to see if support for other mobile devices crops up. Are they more interested in selling Kindle hardware, or selling ebooks? Who besides me would like a Kindle app for their netbook or laptop?
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