Amazon: a money-losing success
By Rosemary Westwood - Tuesday, February 12, 2013 - 0 Comments
The latest financial results are ugly. So why are investors still in love with the online behemoth?
When a company reports a 45 per cent drop in profit for the quarter, what does its stock price do? If it’s Amazon, it soars. On Jan. 29, a day after the online shopping behemoth released its disappointing fourth-quarter results, its stock went up nearly 10 per cent to $284, pennies shy of the record hit earlier last month. “Have investors gone insane?” asked Henry Blodget, on the financial blog the Daily Ticker. A Forbes article called those who rushed to buy “mad hatters” and dubbed the whole situation “Amazon in Wonderland.”
So what explains it? The answer can be found partly in the company’s growing sales, up 22 per cent in the quarter, to $21 billion. Along with sales of consumer goods—from books and televisions to diapers and toys—revenue is growing from Amazon’s cloud computing system (used by tech companies like Netflix and Dropbox). Its Kindle brand, meanwhile, has helped the company increase ebooks sales by 70 per cent last year. And Amazon continues to grow its tablet line (the Kindle Fire is the latest) to compete with the likes of Apple and Samsung. There are rumours the company is eyeing the smartphone business, too.
Amazon’s chief problem is that its low prices and free shipping strategy ensure that its profit margin is miniscule. (Amazon actually lost $39 million in 2012.) But there is lots of room for growth and signs of improvement. Gross margin increased by four per cent last quarter over the same period last year. The company is also investing heavily in new shipping centres, which could further boost profitability. Victor Anthony, an Internet analyst with Topeka Capital Markets, says Amazon’s stock is actually undervalued.
Consider, by comparison, the fate of Apple. The iPhone maker also released quarterly results last month. It had record profits of $13 billion, but a shrinking gross margin, down six per cent from the same period last year. As a result, investors lost faith and its stock took a hit, dropping by about the same amount (10 per cent) that Amazon’s stock went up.
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Your e-reader is watching
By Mika Rekai - Monday, November 26, 2012 at 11:50 AM - 0 Comments
It tracks when you read and when you don’t. Will it soon determine what you read?
For Catherine Henderson, curling up with a good book has always been an escape from reality. What the retired teacher doesn’t know, however, is that while she is lost in her Kindle, someone is reading over her shoulder.
Before ebook readers became popular in 2010—when e-reader sales quadrupled within months—publishers had only one way of measuring a book’s success: sales. Back then, it was almost impossible to do detailed market research that didn’t involve direct feedback, either through letters to the publishers or reader surveys. But the information didn’t tell the whole story about what readers wanted to read, and they said nothing about how they read. Did they read the whole book, or lose interest after a few pages? Did they skip certain chapters? Did they highlight and revisit favourite passages? Now the makers of the Kobo, Kindle and Nook are collecting hard data about exactly how their customers read.
When Henderson bought her Kindle a year and a half ago, she admits she may not have looked through the terms of use agreement, which does mention that the e-readers include software to track user habits. “Honestly, I’m a little bit lax with my personal information,” she says. “I guess I expect a certain amount of Big Brotherness.” Continue…
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The future of reading and publishing according to Amazon
By Peter Nowak - Friday, May 11, 2012 at 2:48 PM - 0 Comments
I had a great chat with Russ Grandinetti, the vice-president of Kindle content for Amazon, last week. We covered a bunch of topics, so I thought I’d share some of that here.
As an author, I was naturally self-interested in Amazon’s Kindle Direct Publishing program, which lets writers self-publish and sell their own e-books through the company’s apps and devices. It seems like not a week goes by without some new story about a self-published author achieving great success this way. I can’t wait to try it myself and indeed plan to with my next book, in some markets at least.
With Amazon putting increasing effort into its self-publishing platform, I couldn’t help but wonder what its real relationship with publishers is like. As a growing competitor, it’s clear that the battles we’ve seen so far might only be a precursor to an all-out war down the road.
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The Internet is a 99 cent store
By Jesse Brown - Friday, June 24, 2011 at 11:51 AM - 0 Comments
The questions are many: What’s your debut novel worth? What are you willing to pay for a video game? How much does the best song ever cost?
Also: how do you compete with free? How do you beat piracy? What am I willing to pay in order to not feel like a leech?
One dollar minus one penny seems to be the magic number when selling virtual goods that can otherwise be easily acquired for free. Self-published authors are discovering that when they drop their sticker price from $2.99 to $.99, sales shoot up, and their titles rapidly climb the charts. Rovio, makers of Angry Birds, have built a multimillion dollar business, a buck at a time, and now preach the gospel of that sweet spot price. Kindle Singles are Amazon’s bargain-priced short e-books, which are breathing new life into long-format journalism. Nine of the 10 best selling apps right now on iTunes are priced under a dollar. As different industries experiment with a range of pricing schemes for their wildly divergent products, they are all arriving at the same conclusion: 99 cents.
So is the web just filled with cheapskates, or what?
Maybe, but we’re righteous cheapskates. Any content seller who has tried putting their wares online at the same sticker prices as in brick and mortar stores deserves a bit of dollar store justice for playing customers like chumps. Some have even demanded higher prices for digital downloads. This betrays an outright contempt for consumer intelligence. Baked into the price of a DVD at HMV are manufacturing, printing, and shipping costs, retail space rental and the hourly wage of the stockboy who pointed you to the right aisle. Eliminate all of that, and the consumer rightly feels entitled to a significant savings. Pretend this isn’t true, and you’ll be lucky to get 99 cents.
There’s more to it of course… 99 cents is a magic number that for most people means they don’t have to think too hard about pushing “buy”. Most folks are still getting used to paying for a download, and the low price point allows more and more people to get comfortable with virtual goods. For more experienced users who know how to find content for free, .99 cents is about what it’s worth to not have to bother.
Should a song cost the same price as a movie? Do we value a great book no more than a time-wasting iPhone game? I don’t think so, an in time I imagine that content sellers will regain a bit more pricing flexibility in the hearts and minds of consumers. But for now, I’d buy that for a dollar.
Jesse Brown is the host of TVO.org’s Search Engine podcast. He is on Twitter @jessebrown.
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The new e-book hot spot
By Chris Sorensen - Wednesday, May 4, 2011 at 11:20 AM - 0 Comments
Public libraries are becoming key players in e-publishing
With its worn carpets, potted plants and shelves of dog-eared books, who would have guessed the humble public library would emerge as a key player in the world of online media? Yet that’s exactly what’s happened after bookseller Amazon finally decided to allow owners of its popular Kindle e-reader to borrow digital copies of books from 11,000 local libraries in the United States, a feature that was previously available only to owners of rival machines. The move opens up the libraries’ free digital collections to an estimated 7.5 million Kindle users in the U.S., about two-thirds of the e-reader market. A spokesperson for the Toronto Public Library said the service is expected to come to Canada eventually, although no date has been set.
But while Amazon’s move promises to boost Kindle sales, it could come at the expense of selling online books. Which likely won’t sit well with publishers. At present, most libraries buy and lend e-books the same way they do regular ones, to one person at a time for a period of two to three weeks. But at least one publisher, Harper Collins, has changed its policies to require libraries to repurchase titles after they’ve been borrowed 26 times, while others have declined to sell to libraries at all.
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From e-books to no books
By Stephanie Findlay - Thursday, October 7, 2010 at 2:20 PM - 0 Comments
In the juggle of priorities on campus, books are falling off the shelf
Earlier this month, the University of Texas at San Antonio announced it had built the world’s first bookless library. Its Applied Engineering and Technology Library offers access to 425,000 e-books and 18,000 e-journal subscriptions, and librarians say they’ve yet to hear a complaint from the 350-plus students and faculty who pass through its doors daily. “We’ve gotten no negative feedback,” says Krisellen Maloney, library dean at the University of Texas. “We looked at circulation rates, we looked at electronic resources, we looked at requests, and we decided that having the services was more important than the physical books.” She adds bluntly: “When we prioritized the needs, the books weren’t the priority.”
It used to be that the size of a collection defined a library’s greatness, but now with access to online academic journals and e-books, a large physical collection doesn’t yield the same competitive advantage.
Now the bookless trend is taking hold in Canada, where more and more libraries are expanding their electronic resources. “My own institution has increased its holdings exponentially,” says Ernie Ingles, vice-provost and chief librarian at the University of Alberta and president of the Canadian Association of Research Libraries (CARL). “Virtually 90 per cent of our journals are electronic now, without print equivalents, and I believe we have approaching one million e-books in one kind or another.” Ingles says that all the members of CARL, including the University of British Columbia, the University of Ottawa and Dalhousie University, are moving in a similar direction.
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At home down-market
By Chris Sorensen - Thursday, July 1, 2010 at 10:00 AM - 0 Comments
Amazon slashes prices on the Kindle e-reader
Online bookseller Amazon generated big buzz when its Kindle e-reader went on sale for $399 in 2007. But the arrival of the iPad this year, with its full-colour touchscreen, e-reader and Internet-browsing capabilities, had the effect of making the Kindle and its black-and-white display seem dated literally overnight. As a result, Amazon and other makers of e-readers are now hoping their machines will find a comfortable home down-market. This week Amazon slashed the Kindle’s price by US$70 to US$189.
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This week: Good news/Bad news
By macleans.ca - Wednesday, February 3, 2010 at 9:20 AM - 0 Comments
A week in the life of Sandra Bullock
A week in the life of Sandra Bullock
For the first time in her career, the star of umpteen romantic comedy flicks is receiving critical praise for her acting. Bullock’s starring role as a mother of two who takes in a struggling football star in The Blind Side has already garnered her a Golden Globe for Best Actress, and last Saturday she was honoured with another trophy—this time at the Screen Actors Guild Awards. There’s only one major stop left in awards season—the Oscars—and Bullock is considered the front-runner.
Face of the weekGARY COLEMAN, who played Arnold Jackson on Diff’rent Strokes, was arrested in Utah on Monday on domestic violence charges
Good news
Helping Haiti
Heartbroken Canadians have rallied behind Haiti in inspiring ways. A multi-network Canada for Haiti telethon raised $40 million, including federal contributions, in just one hour. (In comparison, America’s telethon, Hope for Haiti—which featured some of the biggest stars in film and music—raised US$60 million over the entire broadcast.) Canada is also delivering much more than money to the earthquake-ravaged capital of Port-au-Prince. Along with troops and medical aid, Ottawa is fast-tracking Haitian adoption cases so that homeless foster children can arrive here as soon as possible. Rebuilding Haiti will take many years and many more dollars, but in these early days, Canadians have every reason to be proud.Stop the head shots
It was a stern punishment—and a justified one. Patrice Cormier, the junior hockey player who landed a vicious elbow to an opponent’s head, has been banned from Quebec’s junior league for the rest of the season. It was a gutsy decision, considering that Cormier is a major star (he captained Team Canada at the recent World Junior Championships) with a bright pro career ahead of him. The NHL must take note. For years, the big league has mused about the need to get tough on head shots—but never acted. As the Cormier case shows, if you want to rid the game of dangerous, inexcusable cheap shots, you need to target the cowardly perpetrators.
Denouncing a tyrant
Are Venezuelans growing tired of Hugo Chávez’s tyrannical rule? Cable companies in the country yanked Radio Caracas Televisión Internacional off the air after it went against new rules requiring networks to carry certain programming, including Chávez’s speeches. In response, thousands of university students took to the streets, protesting the president’s iron grip on the media. An election is scheduled for September, and the winds of change may be picking up steam.
A new chapter?
This week offered two bits of encouraging news for bookworms worried that Amazon’s new Kindle e-reader will make hardcovers and paperbacks a thing of the past. Famed Winnipeg bookseller McNally Robinson has emerged from a short stint in bankruptcy protection (the company filed in December) saying it still believes there is room for growth in the traditional book market. Its main rival, Indigo Books & Music, is already proving that point. The country’s largest book retailer announced a 29 per cent increase in quarterly profits, even though online business fell 2.7 per cent, thanks to surging sales at its bricks-and-mortar stores.
Bad news
Unhealthy kids
A scary new report from the Heart and Stroke Foundation suggests that young adults are at risk for heart disease. Along with the obvious—that more and more young people are morbidly obese— the report reveals that the number of Canadians between 20 and 34 with high blood pressure has almost doubled over the past decade. Ontario thinks it may have the solution: starting in 2011, it will be illegal to sell junk food or pop in every school. A good start, perhaps. But considering that most schools are down the street from a convenience store, the ban sounds more like lip service than hip service.
Animal wrongs
Gail Shea, the federal fisheries and oceans minister, got a pie in the face from a PETA protester during a photo op in Toronto. Surprise, surprise. Another tasteless prank from People for the Ethical Treatment of Animals, the same organization that once compared slaughterhouses to Nazi gas chambers—and just honoured Canadian director James Cameron for an “inspiring message” he never meant to convey. Said PETA: “Viewers will recognize how the plight of Avatar’s catlike Na’vi people, who are faced with being driven off their land by a greedy corporation, closely echoes the real-life plight of animals on earth.” Maybe the folks at PETA forgot to wear the special 3-D glasses.
Precision bombs
Iraqi extremists are doing their darndest to disrupt the country’s path to democracy. On Monday, three bombs went off outside large hotels in Baghdad, killing 36 people, all while international officials are working frantically to make sure that the country’s March elections actually happen. Meanwhile, the news in Afghanistan is equally discouraging. A new U.S. report expects security problems to increase in 2011, in part because the Taliban is getting better at bomb-making.
Don’t blame veils
A parliamentary report is urging the French government to ban Muslim women from wearing full face veils on public transport, in hospitals, schools and government offices. The niqab, said Bernard Accoyer, speaker of the National Assembly, is “a symbol of the repression of women and of extremist fundamentalism.” Unfortunately, he is only half right. The niqabs themselves are not the problem. In fact, many Muslims choose to wear the veil—not because they are oppressed and following orders. The real problem is the other half: the women who are forced to cover their faces by radical fathers and husbands. France—and Canada, too—should figure out a way to punish those specific men, not every woman. -
Canadians get a Kindle surprise
By Chris Sorensen - Thursday, December 24, 2009 at 11:00 AM - 17 Comments
The e-book reader available in Canada isn’t Amazon’s top-of-the-line device

As a software developer, Shane McCallum keeps himself abreast of the latest tech trends. As such, he was willing to jump through a few hoops last summer to get his hands on Amazon’s popular Kindle book reader before it was officially made available to Canadians in November. Though he lives in Revelstoke, B.C., McCallum tricked Amazon’s U.S. website into selling him one of the devices by masking his computer’s ISP address and setting up a fake American account. He then had his Kindle shipped to a post office box located a short drive across the border from his parents’ home in Rossland, B.C.
Such are the travails of the early adopter, but McCallum says it was worth it. The “DX” model McCallum bought, with its 9.7-inch screen (the original Kindle has a six-inch screen) and more than double the capacity of the previous generation Kindle, still isn’t available in Canada. An Amazon spokesperson says the earliest it would be available in Canada would be “some time next year.” McCallum bemoans, “After a few years working in the tech industry, you realize that Canada gets these things pretty slowly, if it gets them at all.”
It doesn’t end there. The version of the Kindle available to Canadians comes with a key feature—an “experimental” Web browser—turned off for all websites except Wikipedia.
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This Week: Good news/Bad news
By macleans.ca - Friday, November 20, 2009 at 9:00 AM - 1 Comment
A week in the life of Aerosmith and GM gives back
A week in the life of Aerosmith
Rock stars can be an indecisive bunch. Last week, rumours swirled that lead singer Steven Tyler had quit his band, Aerosmith, after more than 30 years together and countless hits, and Joe Perry, the band’s guitarist, said he and the rest of the group would be looking for a singer to replace Tyler. Happily, the boys managed to overcome their differences—Tyler and Perry appeared onstage together in New York City and Aerosmith is reportedly back together.Good News
Best foot forward
The Canadian ski team revealed this week it has been using a top-secret high-tech gadget called “Stealth” in training for the Vancouver Games. The device allows the latest edition of the Crazy Canucks to track their every move down the slopes—and then evaluate where to find more speed on course. Stealth was developed at the University of Calgary three years ago, but our skiers were sworn to secrecy so that other teams wouldn’t get their hands on it. Hey, all’s fair when it comes to the Olympics (except, ahem, certain illegal things). Too bad women ski jumpers won’t be finding their way downslope as well—the B.C. Court of Appeal rejected female jumpers’ claim of discrimination last week.GM gives back
When the Canadian and Ontario governments handed General Motors Canada a $10.6-billion loan in June, many cynically suggested we’d never see the money again. They were wrong: on Monday, GM announced it would begin to pay back the loans earlier than expected—an initial $200 million will be returned to Canada in December, and the company expects to repay the rest ahead of the July 2015 maturity date. GM is also considering an IPO in 2010—which could actually make money for Canada and Ontario.Befriending China
China isn’t so bad after all—that’s the message Barack Obama is trying to impress on his first visit to China as U.S. President. Obama and Chinese President Hu Jintao met in Beijing on Tuesday to discuss climate change and economic policy; the two later released a joint statement to the press, the first time the leaders of the U.S. and China have done so in more than a decade. Obama also held a town hall-style meeting with Chinese university students (though some reports suggested Chinese authorities meticulously chose participants from the ranks of the Communist Youth League). The next step is engaging Beijing on its less-than-stellar human rights record, something Obama has thus far proven reluctant to do.
Ready to e-read
The Kindle is finally coming to Canada. After years of waiting patiently, Canadians will be able to get their hands on Amazon.com’s e-book reader, which has been a big hit in the United States. There is a catch—you’ll have to buy the device through the U.S. online Kindle store (for US$259) and pay extra for shipping and duties. But the good news is that the Kindle will be here in time for Christmas. Now, if only we could get the online TV service Hulu.com and the Google Voice phone service, we’d be a truly high-tech nation.Bad News
We’re giving less
After giving a record $8.6 billion to charities in 2007, Canadians scaled back their generosity in 2008. Job losses and a global recession contributed to a five per cent drop in charitable donations—to $8.2 billion—according to figures released this week by Statistics Canada. Despite the tough times, however, relative generosity hasn’t changed much across the country. As was the case in 2007, Prince Edward Island and Alberta are still the most big-hearted provinces, with median annual donations of $370 and $360 respectively. And Quebec is still the stingiest, with a median annual donation of $130.Parizeau speaks
He’s back! In a new book, La souveraineté du Québec hier, aujourd’hui et demain (Quebec Sovereignty Yesterday, Today and Tomorrow), former Quebec premier and separatist movement champion Jacques Parizeau argues that Quebecers would be better able to fight the global recession on their own—that is, without the rest of Canada—and suggests that a third referendum will occur in the not-too-distant future. With separatism at an all-time low in Quebec, we wish Parizeau would fade away. He brought us to the brink once before—and that’s once too often.
Don’t trust Iran
“Boring”—that’s how an Iranian official described the International Atomic Energy Agency’s new report, which chastised Iran for being uncommunicative about its nuclear ambitions. After Barack Obama revealed in September knowledge of a second hidden nuclear plant, the Iranians went into defence mode, claiming the site was simply a “backup” if the larger, previously acknowledged, site were to go down. Call us crazy, but we don’t trust the Iranians when it comes to their nuclear ambitions—why all of the secrecy and posturing if this is really about providing power to the country?Corruption champs
For the second year in a row, Afghanistan and Iraq are at the top of Transparency International’s annual survey of the world’s most corrupt countries (Somalia rounds out the top three). This is sobering news for those who support the West’s efforts to end the rule of terrorists and tyrants. There is no doubt of the widespread corruption in both Afghanistan and Iraq—the former’s recent election embarrassment was a major failure on the road to democracy. Still, we cannot lose our resolve to fight the Taliban and al-Qaeda, who want to install sharia law, strip women of all rights and wage a holy war against our freedoms. This survey should only strengthen our commitment.FACE OF THE WEEK

AWARD EATING: Christine Ghawi, who played Céline Dion in a CBC biopic, poses with her Gemini award for Best Actress
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The next frontier
By Chris Sorensen - Thursday, November 5, 2009 at 12:20 PM - 1 Comment
Will hand-held tablet PCs revolutionize mobile computing?
When Ken Dulaney and three other tech visionaries set out to build a tablet computer nearly a quarter century ago, the idea seemed like a no-brainer. Tablets were, after all, a key piece of equipment in the 1960s television series Star Trek, which would ultimately have a decent track record of predicting future technologies such as wireless communication, biometric identification and non-invasive medical procedures, if not interstellar space travel. More importantly, tablets promised to literally put the power of a personal computer in people’s hands.But the GridPad, a clunky 4.5-lb. machine with a green-hued electroluminescent screen and stylus, failed to take off, save for in a few niche sectors in government and health care. Several other efforts suffered the same fate. “We had a number of customers who did their work while standing or walking,” says Dulaney, who worked alongside Palm founder Jeff Hawkins on the project. Continue…
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You buy a book but don’t own it?
By Brian Bethune - Thursday, August 13, 2009 at 2:00 PM - 1 Comment
Amazon’s Kindle deletions sparked a host of questions over e-book rights and privacy
On July 17, when the online book retailer Amazon removed some e-books from its Kindle electronic reading device, the first media reports concentrated on the irony—cheap but delicious—that two of those disappeared titles were by George Orwell: Animal Farm and 1984. “Big Brother in the digital age” and “Orwell down the memory hole” were typical headlines placed over brief, written-to-amuse items about Amazon’s embarrassment when it realized that it didn’t have the legal right to sell those Kindle offerings. But it didn’t take long for more profound implications to sink in, or for the angry backlash to explode.Amazon hadn’t merely stopped selling those e-books, it had reached right into owners’ Kindles—via the same Whispernet wireless network it had used to load the readers with 1984—and removed copies the firm had already sold. While Amazon did refund the purchase price, its actions were, as more than one furious customer complained, equivalent to bookstore employees creeping into customers’ homes at night, culling their bookshelves and leaving a cheque behind. And the less tech-savvy the Kindle owner, the more astonished and angry the response. As Charles Slater, a Philadelphia executive, expostulated to the New York Times, “I never imagined that Amazon actually had the right, the authority or even the ability to delete something that I had already purchased.” Continue…
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When ‘free’ becomes really expensive
By Andrew Potter - Monday, July 13, 2009 at 4:25 PM - 31 Comments
In the age of digital culture, it is not just access to art that has been democratized, but its production as well.
My iPod is packed with thousands of songs I’ve never listened to, by bands whose names I don’t recognize. The hard drive of my laptop contains dozens of movies I’ve downloaded and never watched, and if all goes according to the pattern, I will soon have a Kindle full of books I’ll never read by authors I don’t appreciate. I’m far from alone in this: in the age of digital reproduction, we treat art as a commodity—cheap, ubiquitous, and disrespected.There’s been a lot of talk recently about economics in the digital age, thanks to a new book by Wired magazine editor Chris Anderson called Free: The Future of a Radical Price. As Malcolm Gladwell pointed out in his challenging review in The New Yorker, Anderson’s book is little more than an extended riff on the old cyberlibertarian slogan, “information wants to be free.” Gladwell’s review sparked a bit of a free-for-all amongst bloggers, with everyone from branding guru Seth Godin to Dallas Mavericks owner Mark Cuban chiming in with their own opinions on the matter. Continue…
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You can't buy that here
By Colin Campbell - Tuesday, June 9, 2009 at 3:15 PM - 31 Comments
Why Canadians have to wait for the coolest new gadgets
In a university hall in New York City last month, in front of a standing-room-only crowd, Jeff Bezos, the founder and head of Amazon.com, unveiled a piece of electronic gadgetry that could revolutionize the way the world reads books, gets news, and receives information of all kinds. It was an ugly-looking slab of computer screen, but that didn’t dampen the crowd’s enthusiasm. The wireless gizmo, called the Kindle DX, may not be pretty—it lacks the elegant simplicity of the Apple iPod—but it does one thing virtually no other device has been able to do. With its big, crisp 9.7-inch display, it makes reading online as easy and enjoyable as doing it the old-fashioned way. And it can quickly download a library’s worth of content.There have been no shortage of e-book skeptics, but earlier versions of the Kindle have flown off of shelves. Amazon.com sold an estimated 500,000 Kindles last year—and was sold out of the device over Christmas. One analyst estimates it will earn the company over $1.5 billion in revenue by 2012. In the U.S., book sales may be on the decline, but e-book sales are surging. In Japan recently, four of the top 10 bestsellers were released exclusively as e-books. And Bezos was joined onstage by the chairman of the New York Times, Arthur Sulzberger, Jr.—“Wonderful!” he shouted at the device’s unveiling. Along with the Times, the Boston Globe and the Washington Post will soon be testing their products on the Kindle in the belief it could save their industry. What Bezos unveiled was a whole lot more than a gadget. A lot of people are thinking the Kindle will be to the printed word what iTunes has been to music.




















