We can’t know for sure how many Kindles Amazon (AMZN) is selling, because the company refuses to release figures. But there’s no doubt that the Kindle is a juggernaut. Not bad for a product that was introduced only three and a half years ago, and which has faced stiff and growing competition ever since.

In the note (pdf) he released yesterday, Mahaney repeated the word “wow” several times after giving up a datapoint. Such as: sales of the Kindle and eBooks will comprise 10% of Amazon’s sales by 2012. That’s when “critical mass” is achieved, Mahaney says, meaning that Kindle and e-book sales will have become a major driver of Amazon’s growth.

Another “wow”: e-books have already surpassed printed books in terms of volume at Amazon. In another two or three years, that will be true industrywide.

According to Citigroup’s analysis, the company will sell 17.5 million of the devices this year, generating about $2 billion in revenue. And it will sell 310 million e-books, for about $1.7 billion in revenue. So far this year, Mahaney estimates, sales of the Kindle are running three times ahead of the same period last year.

That’s thanks largely to falling price points. The cheapest Kindle now sells for $114. That probably means that at least some people are happy to buy an iPad or other tablet computer as well as a Kindle. Tablets will doubtless present ever-growing competition as prices for them fall as well. But for now, they don’t seem to be holding the Kindle back. Nor, so far, do competitors such as Barnes & Noble’s Nook device.

Some of the reasons for Kindle’s success, according to Mahaney, are the low price points, “improved functionality,” the “simple, sweet and memorable” TV spots Amazon has been running, better retail distribution, and ever-increasing numbers of titles Amazon makes available as e-books. They now number about 1 million.

Amazon CEO Jeff Bezos has a shorter explanation. At Amazon’s shareholder meeting today, he reportedly called Amazon’s Kindle strategy “very straightforward.” Amazon has “the best purpose-built e-reader, the best e-bookstore, and the best ecosystem so you can read where you want to.

“We’re very simple-minded about this,” he said. “It seems like what our customers would want.”