Updated Kindle opens new chapter for Amazon.com

NEW YORK — There's a lot riding on Amazon.com's new Kindle electronic book reader.

The $359 gadget, unveiled Monday by Chief Executive Jeff Bezos at the Morgan Library in New York, isn't going to make the entire book world go digital. It's likely to be purchased mostly by well-off technology and book enthusiasts, the crowd who embraced the first version introduced in 2007.

But the intriguing device, and its underlying business innovations, are burnishing the Seattle company's reputation as a pioneer in online commerce.

It's also a test of whether the 14-year-old company can sustain an entirely new and complicated hardware business.

Perhaps most important for Amazon's broader business, the Kindle is an opportunity for the company to further cement relationships with book publishers and help define how books are sold in coming generations.

Remember, the Kindle, which will ship Feb. 24, isn't just hardware. It's also a software and services platform that people — and publishers — will use to build and manage libraries stored and updated by Amazon's network.

Amazon also is extending the Kindle platform — and its "Whispersync" wireless synchronization software — to mobile phones.

That would allow devices to communicate with one another so that you could read a book, say, on one device and pick up where you left off on another.

In an interview, Bezos wouldn't say much about plans to put the same software on computers as well, but it's clearly part of the plan to have Kindle software on many more devices than the Kindle itself.

This comes as publishers grapple with the same concerns about digital piracy and slowing sales that have affected the music and movie industries. To them, Amazon offers a way to sell digitally protected copies without the high cost of printing presses.

Sony, Google, Apple and other companies are introducing devices and software for reading printed material on phones and other mobile devices, some of which may be more attractive and less expensive than the Kindle.

But when you think of Kindle not just as a device but a bundle of services — including an electronic bookstore with 230,000 titles, a high-speed wireless connection and a litany of reading-oriented features, all embodied in a $359 gadget — Amazon seems to have a lead over the competition.

Here's an edited version of a conversation about Kindle 2.0 with Bezos:

Q: What's it going to take for this to really take off — lower price?

A: It is taking off. [laughs]. No, I mean it very sincerely. We have twice been sold out during the holiday season, which is a darn good plan, and it was not our plan. In both cases, we had made way more devices than we thought we would need and we still sold out.

Q: Maybe I should rephrase that. When will it become a mainstream device?

A: Well, if you're a reader, it's a purpose-built reading device. So is it for everybody? Maybe not. Will it ever be for everybody? Maybe not.

But if you like to read — newspapers, books, magazines — this is a great device to have. If you're that person, I would say it is mainstream already for the right audience.

Q: I didn't want to bring up the iPod comparison, but I noticed the brushed metal back and curved edges. Do you guys have a little iPod envy?

A: ... [H]ave you held it yet? It's beautiful. I can take no credit for it since I had nothing to do with it [laughs], but I can be a proud father [laughs again]. But the engineering team did a remarkable job on this device.

As you can see, it's very, very thin — for a 3G wireless device. This is a difficult technical achievement. Our customers are the beneficiaries.

Q: Will you take the software you have on a Kindle and put it onto something like a netbook?

A: That's what Whispersync [technology in the Kindle] is about. ... We want to make Kindle a bookstore — the largest e-bookstore in the world, with 230,000 titles and growing. We want to make those titles also available on a bunch of different devices and then synchronize them with Kindle.

If you're in line at the grocery store and you want to read a few pages on your phone, you can go right where you left off ... and then when you get back home, maybe you pick up your Kindle and keep reading there.

Q: Is there pressure on Amazon from publishers to price the Kindle at, say, $199 to increase the platform's reach?

A: We can't offer this for $199. ... If we could make this device cheaper we would. But we can't. There's a lot of technology pushed into this little tiny package. It is what it is.

When you buy a 3G phone, by the way, you're signing up for a two-year contract with a $60-a-month bill. They're subsidizing the cost of the hardware with the $60 a month or whatever it is you're paying.

[The Kindle] is sold with no annual contract and no monthly bill. You buy this device and whatever you buy — a newspaper subscription — you pay for that. You buy a book, you pay for that.

We're not asking people to sign up for a two-year contract.

Q: Did you have to build something like this to maintain Amazon's position as a bookseller?

A: To get this whole ecosystem to work, we had to build an integrated, seamless reading experience. Keep in mind we had tried the unintegrated, unseamless approach because we've been in electronic books for years and it didn't work, nobody cared. So it's the seamlessness, of putting the whole thing together and making it really easy and clean for people, that's making it work.

Q: Did you think you had to have the hardware or somebody else would — and take from your book business?

A: ... [W]e love being pioneers. We are always focused on looking down new alleys. Most of the alleys we look down turn out to be blind alleys, but every once in a while we go down one that turns into a big broad avenue. You can pursue the competitor strategy of close following ... you don't have to spend all this money on those blind alleys. When you see somebody do something successful, you jump on it and copy it as quickly as possible. There's nothing wrong — that's a valid business strategy. It happens not to be ours.

We've been very customer-focused for our history and we like inventing new things. The kind of people we've attracted over the years like to invent new things, so for us this all about the future and all about optimism.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com