An iPhone application that allows users to read books purchased from the app store has already been downloaded more than 395,000 times. Meanwhile, sales of Amazon’s Kindle will be around 380,00 for all of 2008 according to analysts. The iPhone app is called Stanza and is free, and since Stanza only offers public domain books, all the reading material on Stanza is also free. Obviously, this limits the number of titles you can actually read on your iPhone, but 395,000 downloads for an application that only works with public domain books versus sales of 380,000 for a device on which you can read anything is quite impressive. Reports show that the makers of Stanza are working on deals with several major publishers to expand the offering of ebooks available. Forbes has the scoop here.