Amazon's acquisition of shoes-and-more retailer Zappos is complete, the e-commerce giant said in a release Monday. The company in July had announced its intent to make the purchase, for about $850 million in cash and stock.
Zappos, which made a name for itself based on outside-the-box customer service principles, will stay independent from the Amazon.com brand and will continue to operate out of its Las Vegas headquarters.
Numbers released by J.P. Morgan Research in conjunction with the acquisition announcement predict that Zappos will post moderate, single-digit growth for the 2009 fiscal year after raking in $635 million in revenues last year.
A 17-year-old from Michigan has filed a lawsuit against e-commerce powerhouse Amazon after it deleted a book he had purchased for his Kindle device.
The high school student, Justin D. Gawronski, filed suit in a Seattle court along with California resident Antoine J. Bruguier, and they are seeking class action status.
Amazon forcibly (and ironically) recalled copies of George Orwell's "1984" and "Animal Farm" earlier this month after it was revealed that they were unauthorized. Justin Gawronski's complaint alleges that he was reading "1984" as summer reading for an advanced-placement class and had to turn in "reflections" on each hundred pages. With the loss of the digital book, Gawronski claims his page count was thrown off and his notes were "rendered useless because they no longer referenced the relevant parts of the book."
Amazon has declined to comment on the lawsuit, which appears was first reported late Thursday by The Wall Street Journal's Digits blog.
While buyers received refunds for the recalled copies of the Orwell books, the fact that no advance notice was given threw many customers off and created an uproar against Amazon. The lawsuit, for one, alleges that Amazon did not make it clear enough to customers that remote book deletions were a possibility. It also alleges, as do critics, that the company violated its own terms of use.
"The power to delete your books, movies, and music remotely is a power no one should have," the lawsuit quoted Slate's Farhad Manjoo as saying in an opinion piece following the book deletions.
Amazon founder Jeff Bezos put out a public apology shortly after the fiasco unfolded, but it's not clear how the company's policies will (or won't) change in the future.
Whoa. This was unexpected: Amazon has agreed to a stock takeover of Zappos.com, a Las Vegas-based online retailer that has become famous for its unusual corporate culture.
While Zappos started out selling only shoes, it has since expanded to other products.
"This morning, our board approved and we signed what's known as a 'definitive agreement,' in which all of the existing shareholders and investors of Zappos (there are over 100) will be exchanging their Zappos stock for Amazon stock," a memo posted to Zappos by CEO Tony Hsieh read. "Once the exchange is done, Amazon will become the only shareholder of Zappos stock."
Until this point, Zappos was privately owned.
Amazon provided more details in an official release: The company will acquire all outstanding Zappos shares in exchange for roughly 10 million shares of Amazon common stock, which comes out to be about $807 million. Additionally, the transaction involves about $40 million in cash and restricted stock units to Zappos employees. The transaction is expected to be complete this fall.
"We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture, and we believe that Amazon is the best partner to help us get there faster," Hsieh wrote in his memo, adding that he and other Zappos executives plan to stay on board. "Amazon supports us in continuing to grow our vision as an independent entity, under the Zappos brand and with our unique culture."
Zappos.com got a new look a little over a year ago, when it broadened its offerings beyond just shoes.
Hsieh has become a regular speaker on the tech and marketing conference circuit because of his offbeat way of running a company: encouraging employees to Twitter, offering prospective hires $2,000 to turn a Zappos job offer down, and placing customer service at the top of the priority list with free shipping and returns.
"As you know, one of our core values is to build open and honest relationships with communication, and if I could have it my way, I would have shared much earlier that we were in discussions with Amazon so that all employees could be involved in the decision process that we went through along the way," Hsieh wrote. "Unfortunately, because Amazon is a public company, there are securities laws that prevented us from talking about this to most of our employees until today."
Reports had circulated recently that Amazon was looking at acquiring movie rental outlet Netflix. It has a history of being quite acquisition-friendly. Last year, the company bought audiobook retailer Audible for $300 million, rare book site AbeBooks for an undisclosed amount, and book-centric networking site Shelfari (also for an undisclosed amount).
Amazon actually operates its own shoe and handbag retail site, Endless.com, which is mostly free of Amazon branding. The site launched early in 2007.
This story was last updated at 2:01 p.m. PDT.
Amazon.com has filed for a number of patents that hint at ad-supported books for its Kindle e-reader--more specifically, a free or discounted ad-supported e-book for customers who buy the physical version.
Amazon Technologies, a subsidiary of Amazon, filed for a patent ("Method and system for access to electronic version of a physical work based on user ownership of the physical work") in December 2006. It was approved last month and makes it possible for buyers of a physical book to have an e-book bundled with it.
But two additional patents, filed a year later by Amazon employees (and not yet approved), are the more interesting ones: these, according to MediaPost, "clearly note that Amazon would insert advertisements throughout the e-books, from the beginning to the end, between chapters or following every 10 pages, as well as in the margins."
It looks like the story first surfaced on Slashdot last Friday.
Presumably, this could be a way to guide potential Kindle customers through the transition--which some find daunting--from consuming primarily physical books to digital ones, subsidizing the price of either or both of them in the process.
Ad money would be an additional revenue stream for Amazon too.
This post was updated at 10:14 a.m. PT.
NEW YORK--Amazon CEO Jeff Bezos was coy about exactly why he isn't thrilled with Google's attempt to forge its way into the digital publishing business.
"We have strong opinions about that issue which I'm not going to share," Bezos said to interviewer Steven Levy at the Wired Business Conference. "But, clearly, that settlement in our opinion needs to be revisited and it is being revisited."
In a court battle rife with twists, turns, and delays, Google has been attempting to push forward its Book Search initiative, which could potentially give the Mountain View, Calif., tech giant exclusive access to digital editions of some out-of-print books. That could, as Levy pointed out, get in the way of Amazon's goal of offering every book ever printed in every language on the Kindle and its new, bigger Kindle DX sibling. And it sounds like that's where Amazon has some beef.
"There are many forces of work looking at that and saying it doesn't seem right that you should do something, kind of get a prize for violating a large series of copyrights," Bezos said.
Bezos was speaking at the conference, which had the subtitle "Disruptive by Design," to talk about Amazon's legacy of shaking up the retail industry and now potentially the publishing industry with its Kindle e-reader device. Most of his talk was focused on the sort of business advice that one might expect a tech company to provide to a room full of big-business and old-media types ("be stubborn on the big things and very flexible on the details," "you have to be willing to be misunderstood for long periods of time"), but he did get a few minutes to talk about how he thinks the Kindle is changing things.
In New York, a longtime global hub of the beleaguered publishing, media, and advertising industries, what he had to say was particularly weighted. The Kindle, after all, is doing extremely well: Bezos said that out of the entire offering of 300,000 books available for both the Kindle and physical retail on Amazon, that the Kindle's sales are 35 percent of physical books' after only 18 months on the market.
"Internally, we are startled and astonished by that statistic," Bezos said.
But he wouldn't promise that the device will singlehandedly save the newspaper industry.
"I never want to convey that I think we have a sinecure with any particular product offering, but if we execute well and other companies that do these kinds of electronic readers, that is going to be part of what happens with newspapers," Bezos said. "And I do think there are going to be multiple companies competing with reading devices and I think there's room for multiple winners."
Like much of the speakers at the Wired Business Conference, Bezos talked extensively about how things have changed over the past few years, and how it demands a deep rethinking of business practices in all industries. In this case, he was talking about the media business.
"Unfortunately, there's a collision of several major issues happening to the magazine, newspaper, and publishing industries all at once, including most recently the recession which has taken a bad situation and made it much worse," he said. "But the biggest structural problem in my opinion is there's just so much supply of advertising space. That's a fundamental problem that's not going to go away."
But at the same time--in keeping with the conference's theme--there's an extraordinary amount of opportunity, Bezos insisted.
"Some of the most important barriers to entry in that industry have been dissolved, and they've been dissolved permanently."
Amazon CEO Jeff Bezos shows off the Kindle DX
(Credit: Sarah Tew/CNET News)NEW YORK--Amazon CEO Jeff Bezos unveiled the much-anticipated large-screen Kindle e-reader in a lecture hall Wednesday at the downtown Pace University. Called the Kindle DX, the new device is geared toward readers of personal and professional documents, newspapers, and magazines--and textbooks, a potentially huge target market.
The debut of the bigger Kindle wasn't exactly a secret: rumors of a larger-screen Kindle had been around for quite some time, and concrete reports began to surface earlier this week.
Amazon's Kindle DX
(Credit: Amazon)According to Amazon's Kindle DX page, the device has the following:
• A 9.7-inch display with 16 shades of gray. (The standard Kindle has a 6-inch display.)
• Capacity to hold up to 3,500 books, periodicals, and documents.
• An auto-rotating screen to show either portrait or landscape views.
• A built-in PDF reader.
• 3G wireless network support with no monthly fees or annual contracts.
• Battery capacity to "read for days without charging."
• Text-to-speech abilities to read publications aloud.
Several of those features are shared with the current Kindle 2, but several are unique to the Kindle DX: the native PDF reader that doesn't require the files to be converted, the rotating display, the 3,500-publication capacity compared to 1,500 for the Kindle 2, and of course the larger screen.
... Read more
Leaked photos of the alleged 'Kindle DX' device from Amazon.
(Credit: Engadget)Newspapers hoping the next version of Amazon.com's Kindle e-reader will be a savior for their beleaguered businesses are likely to be disappointed when it's unveiled Wednesday. But this Kindle could win plenty of converts in academia.
Amazon is slated to unveil a new, larger-screen version of the Kindle, which it originally launched late in 2007. Possibly called the Kindle DX, the new device is designed for reading newspapers, magazines, and textbooks, and it's expected to be part of new electronic course material test-runs at six universities this fall. The list, according to The Wall Street Journal, consists of Pace University (where Amazon is holding Wednesday's press conference), Case Western Reserve, Reed College, Arizona State University, the Darden School at the University of Virginia, and Princeton University--Amazon founder Jeff Bezos' alma mater, which already publishes Kindle textbooks.
This move makes loads of sense. Anyone who's been to a U.S. college in the past few decades could tell you that textbooks are very highly--some would say obscenely--priced. They're also bulky, and often difficult to get rid of once purchased: Selling the third edition of an introductory biology textbook on the used-book market is pretty difficult when the fourth edition comes out a year later. Theoretically, this should be the perfect market for an electronic reader like the Kindle.
But just because Amazon has inked a few deals with textbook companies, and a handful of prominent academic institutions, doesn't mean that hordes of incoming freshmen across the U.S. will be moving into dorms this fall with Kindles in hand.
"I do think the textbook market will be the killer app for e-readers," said Sarah Epps, a media analyst at Forrester Research. "(But) we think it's going to start to develop in 2011 and really pick up in 2013...We've been talking to publishers, talking to universities, and what we're seeing is that from the publisher perspective there's some hesitation."
Why's this? There are a lot of questions for the publishing industry, the biggest of which is whether electronic textbooks will take a bite out of the profits that manufacturers are making from paper textbooks. There's also the potential issue of licensed content in textbooks that might not have digital rights stipulated in its original agreement with the publishers. Then, as Epps pointed out, there's the Google problem.
For the past few years, Google has been pushing forward a book scanning and digitization project called Google Book Search, and though it has some prominent allies in the industry, to say that Google Book Search has been controversial would be putting it lightly. The Association of American Publishers sued the search giant in 2005 over potential copyright violations. Authors and publishers of out-of-print books have petitioned for royalties from digitized books. More recently, library industry trade groups have expressed concern in the form of a legal filing over what Google's efforts could mean for their business. An agreement in court has been delayed.
For Amazon, this could mean that it'll have to deal with some publishers who have become quite suspicious of large-scale digital book projects. But on the flip side, this could work to the Seattle-based retailer's advantage: if the digital shift is as inevitable as it appears, and Google is to be the Silicon Valley villain in this story, then Amazon, which has been in the book business for nearly two decades, could be the friendlier alternative.
There's also the potential for the new Kindle, whatever it's called, to have a significant impact outside the U.S. Forrester analyst Epps speculates that it will make waves in developing markets like China and India, where there are millions of university students with tight textbook budgets. "Using e-readers for textbooks would be incredibly empowering for students in their universities," Epps said, "but that's going to take some time."
It's clear that Amazon could shake up the twin pillars of educational publishing and academia with its new Kindle, potentially a much bigger splash than the launch of the original Kindle or its improved Kindle 2 successor earlier this year. What's less clear is how immediate the change will be. And what's even less clear is what impact the new, bigger Kindle will have on the market that everyone was expecting Amazon would target: print periodicals.
Rumor has it that The New York Times will be part of Wednesday's Kindle announcement, possibly lowering its price for a Kindle subscription. But this doesn't mean that Amazon's skinny gadget will suddenly save print media: Newspaper and magazine publishers may think they still get the short end of the stick.
"The way things work now, newspapers and magazines can distribute their content over the Kindle if they want, but it's not a very good model for them. Amazon is keeping the majority of the revenue," Epps said. "In addition, there are some business problems, like that publishers can't count subscribers toward their rate base, so it's diluting rather than adding to their subscription base from the perspective of the business."
But while Amazon has the textbook market in focus, it shouldn't let newspapers and magazines get away from it: this is somewhere that the manufacturer of a rival e-reader could sneak in.
"Some of the other device competitors that will be coming to the market over the next year may be more appealing partners for newspaper publishers," Epps said. "It's another distribution channel for their content, but not all distribution channels are created equal. So there could be a great opportunity for publishers to distribute their content on other types of e-readers, where they have a more favorable business model."
Amazon CEO Jeff Bezos holds up the Kindle 2 Monday in New York.
(Credit: David Carnoy/CBS Interactive)NEW YORK--Were there an anthology of gadget launch announcements, the unveiling of Amazon's Kindle 2 e-book reader would have one of the more anticlimactic storylines.
News.com Poll
It started out like any other big press conference, with a line of reporters and photographers streaming out the door onto the chilly sidewalk outside the historic Morgan Library & Museum.
The Kindle 2's arrival had been preceded by the usual blog blitz of leaked photos, rumors, and breathless wish lists. (A color screen! Better PDF support! International versions of the Kindle store!) Amazon CEO Jeff Bezos took the stage, Steve Jobs-style, with a slide show recap of the original Kindle's success before making the big debut.
But the announcement itself was underwhelming. The price, $359, remains the same. The battery life's been improved by about 25 percent. The Kindle 2 is much skinnier than its predecessor, slimming down to 0.36 inches in thickness from 0.7, but it's only a tenth of an ounce lighter. The storage capacity has jumped from 256MB to 2GB, or about 200 to 1,500 books, and the electronic ink display has improved from a 4-shade to 16-shade grayscale.
The layout of some of the buttons has been restructured, and the new Kindle also has a text-to-speech reader. In short, the improvements seem worthwhile, but there was no real curveball to give the Kindle a mainstream appeal.
... Read more
(Credit:
mobileread.com)
Update at 7:25 a.m. PST: Kindle 2 has been officially announced.
Amazon.com unveiled the second generation of its Kindle e-book reader during an event Monday morning at New York's Morgan Library and Museum.
The event started at 7 a.m. PST/10 a.m. EST, and we're updating it live below. Below the CoverItLive box, see photos of the new, $359 Kindle 2, which will start shipping February 24. (See also press release and Kindle 2 site.)
Amazon Kindle 2: Complete CNET coverage
... Read more
Amazon has enlisted a half dozen of its most dedicated (addicted?) reviewers to act as holiday gift experts this season. They'll be responsible for providing gift picks, tips, and other advice regarding their favorite products available on the mega-retail site.
Putting a "real people" face on holiday shopping is key for Amazon in a season full of thin wallets and nervous spenders: research firm eMarketer just lowered its projections for online holiday shopping. Many of the tips provided by Amazon's reviewers, for obvious reasons, deal with cost-cutting recession strategies.
Amazon has offered customer reviews since 1995, and says that over 5 million people have submitted reviews so far. Its "Holiday Customer Review Team" members have between 367 and 1,483 reviews under their belt apiece.
The six chosen ones, in case you happen to live next door to any of them or anything, are: Mark Espinosa of Jersey City, N.J.; Debbie Lee Wesselmann of Allentown, Penn.; Marty Hogan of San Francisco; Zack Davisson of Seattle; Joseph Boone of Irvine, Calif.; and Ed Uyeshima of San Francisco.
Wow, way to ignore the "Real America," Amazon! What would Sarah Palin think?
