B&N only has that number of books because they count the 500,000 free, public domain books from google in their catalogue. Many of those PDF's are of low quality (from google books that is) and can be gotten in better quality from other sites like The Gutenberg Project, which can also be downloaded in Kindle format.
Amazon has access to those books also, but they don't count them in their catalogue number. Amazon has the largest in-copyright book catalogue of roughly 700,000 titles, and increasing every day Amazon has had a head start, and there's no reason to think that they won't keep it.
Also, why are you looking at a Kindle 1?
Hope this helped!
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