Monday, June 9, 2008

The Future







Some provocative stuff here. I'm interested in your take. The future of books...

All Things Digital
The Way We Read
Amazon.com's Jeffrey Bezos on why books are like horses
June 9, 2008; Page R3
Jeffrey P. Bezos, as chairman, president and chief executive of Amazon.com Inc., made e-commerce mainstream when Amazon started selling books over the Internet in 1994.

Since then, he has turned the site into a virtual shopping mall, where the company and thousands of independent merchants sell just about anything from abacuses to zithers.

THE JOURNAL REPORT



• See the complete Technology report.He spoke with The Wall Street Journal's Walt Mossberg about cloud computing, streaming movies and why books are like horses. Here are edited excerpts of that conversation.

Why the Kindle?

MR. MOSSBERG: You're doing digital downloads, and hardware with the Kindle [Amazon's e-book reader]. Why not just stay in your powerful niche of being the go-to place that most people think of as where I buy stuff online?

MR. BEZOS: Most of the extensions we've done to our business over time, we've questioned ourselves. People thought music and DVDs made sense. But we started selling electronics and toys and apparel and shoes. I'm amazed how many shoes we sell today. It's so many that we've started a focused Web site to just do that.

People understand those product extensions at this point. But [with] new hardware, people look and they say, "What are these guys thinking?" We get there by basing our strategy first and foremost on customer needs instead of what our skills are. It's important to take an inventory of your skills and try to do things that match up with your skills. But if you only do that, then eventually you will be outmoded because your customers will eventually need things that you don't have skills for. So you need to renew yourself by developing new skills.

We had been selling electronic books for a long time, and you needed a microscope to find the sales. What customers need is a device that made it very, very frictionless to buy and read electronic books. We wanted to build a seamless, vertically integrated experience, and that required us to develop this whole new skill set.

MR. MOSSBERG: How many have you sold?

MR. BEZOS: We're not disclosing that. I can give you a new stat that we've not shared before. We have 125,000 book titles available for Kindle. When you look at Amazon's physical book sales of those same titles, the Kindle sales are now more than 6% of those total sales.

MR. MOSSBERG: What about the whole idea of people reading on a screen? Just as other kinds of media, like newspapers, see a line of growth for digital and decline for physical, is that going to happen in books?





Jeffrey Bezos
MR. BEZOS: Over some time horizon, books will be read on electronic devices. Physical books won't completely go away, just as horses haven't completely gone away. But there is no sinecure for any technology. If you think about books, it's astonishing. It's very hard to find a technology that has remained in mostly the same form for 500 years. And anything that has stubbornly resisted improvement for 500 years is going to be hard to improve.

That is what we're trying to do with Kindle. We see this as an effort to improve upon the book, even though it's resisted change for 500 years.

To do that, you have to capture the essential element of a book, which is that it disappears when you get into the flow of the story. None of us when we're reading a book think about the ink and the glue and the stitching. All that fades away, and you get into the author's universe.

Sometimes big, heavy hardcover books do break you out of the flow because you get hand fatigue. Or turning pages can be loud if you have a spouse sleeping next to you. There are things about physical books that we're accustomed to but that actually aren't very good.

But you also can't ever out-book the book. You need to look for a series of things that you can do with an electronic device like Kindle that you could never do with a physical book.

Some of them can be pretty simple, like dictionary lookup. I find I don't know what lots of words mean, and I used to guess because -- am I really going to get up off of the sofa and go find a dictionary?

Changing the font size, a very simple thing that's much appreciated.

And then some whoppers. The big whopper is wireless delivery of books in less than 60 seconds. You don't have the cognitive overhead of thinking about your monthly wireless bill. You don't have to know who the wireless carrier is. We're hiding all of that complexity.

MR. MOSSBERG: When I did my Kindle column, I got quite a lot of email from people who were talking about the tactile feel of the book -- the hard-to-describe intangibles around reading a paper book that you lose on an electronic device.

MR. BEZOS: I'm sure people love their horses, too. But you're not going to keep riding your horse to work just because you love your horse. It's our job to build something that is better than a physical book. The reason we love physical books is because we have had so many great experiences with that object in our hands that we have nice associations with it.

We're not trying to displace people's love of that physical object that is the book. It's a hallowed invention. The thing to keep in mind is what's really important is not the container, it's the narrative. Long-form reading is important for our society.

Over the last 20 years, most of the tools that we humans have invented have made it easier for us to be information snackers. If one of the outcomes of Kindle and other devices like it [is] making long-form reading more frictionless so that you end up doing more of it, I think that's a good thing.

Streaming Music and Video

MR. MOSSBERG: You're also moving heavily into selling downloads of music and video onto computers and onto TiVos even. How serious are you about that business?

MR. BEZOS: Very serious. It's a much more difficult business in some ways because there are so many market participants. Video and music have that glamour element, which is always unfortunate, because it attracts people.

What we're working on is a new version of video on demand at Amazon, which is going to be a for-pay streaming service, which we'll release in the next several weeks.

MR. MOSSBERG: And why do you think that that is the right way to go, or the better way?

MR. BEZOS: I don't know if it's the right way to go. Usually, in these markets, it's not winner-take-all. Usually there are a bunch of different customers out there that have different needs. If the market sizes are big enough, a few different models can be supported. And I think the video market's like that.

Is there going to be an ad-supported video? Yes. Is there a commercial-free environment for people who want to pay a little bit of money to not have to watch any commercials? I think so. I think there is a subset of people out there that value their time very highly and don't want to be interrupted. If they want to, they could skip having a latte that day and watch a show commercial-free.

MR. MOSSBERG: ITunes has a very high share of music and also a decent share of video. Do you see that as a temporary thing?

MR. BEZOS: It's very hard to know the answer to that question. They have executed so well and created such a good experience. That's the key issue for people who would compete against them. What we're doing is very different.

We don't have a hardware device. We have DRM-free MP3s, 5.2 million tracks now. It integrates with iTunes, so you can download the songs. You can play them on your iPod.

MR. MOSSBERG: Are you benefiting from the fact that the content companies, at least some of them, are not always very happy with Steve Jobs?

MR. BEZOS: I would frame it slightly differently. I would say that it is clearly in their enlightened self-interest to have a vibrant multitude of companies distributing their music. The music [intellectual property] owners are watching our growth rates very carefully. And I think they're very happy.

Future in the Clouds

MR. MOSSBERG: The other really interesting thing to me that you're doing -- and a lot of people don't quite get it because it's not very consumery -- is this S3 [Simple Storage Service] thing [a pay-for-use data warehouse]. Can you talk about that?

MR. BEZOS: The Web services you're talking about are what we call our infrastructure Web services. They allow you to build applications in the cloud without owning any hardware of your own. Just by writing software, you have a data center.

We live in a weird multidecade era right now where people build their own data centers. I was recently in Luxembourg, and I went on a tour of a brewery. It's a 300-year-old brewery. They showed me their museum. In the museum, they have a 100-year-old electric power generator. And 100 years ago, they had to generate their own electric power, but that didn't make their beer taste any better. They got rid of the electric power generator as soon as they could hook up to the grid.

The computer grid, utility computing -- people use different names for this right now -- is a good idea. And it is going to happen.

MR. MOSSBERG: Are you seeing the effect of this economic slowdown? Or do you worry about it?

MR. BEZOS: As you can see from the last-quarter results that we just put out, we haven't seen that. You can never know for sure because I don't know what our growth rates would've been in a stronger economy. There are some things working to our advantage in this kind of economy.

Gasoline is expensive. Driving to the store is expensive. You take a 2,000-pound car to pick up five pounds of stuff. It's the least efficient transportation network in the world. So, there are some positive factors in our business in that regard.

MR. MOSSBERG: But if I buy a five-pound thing from you, some guy in a 4,000-pound truck is going to deliver it to my house.

MR. BEZOS: But he goes on a route, and that route is very efficient. Half of our deliveries are done by the U.S. Postal Service. They're driving around anyway. And they stop at almost every house. It's super-efficient relative to driving yourself.

2 comments:

Anonymous said...

A fascinating peak into the future with commentary by one of the great innovators of our time.

I especially loved the section about the 4,000 lb car used to pick up a 5 lb purchase!
Brilliant! Thanks for the posting.

Joan said...

I sometimes have mixed emotions about new technology, unless it allows me to reach the same result but with greater efficiency and less cost...but this electronic book thing...is taking me a while to warm up to...

I find it hard to relate to the horse comparison because I've never ridden my horse to work, in fact, I've never used my horse for anything except to enjoy during me free leisure time, which is the same reason I use paper books. I'm not going to give up my horse for an electronic version of it, nothing can take the place of a flesh and blood horse for me, and nothing can take the place of a paper book for me.

I guess we'll just have to see what the future brings, because even though I have strong convictions, I'm a big believer in never saying "never."