8:19 Jeff is on stage.
8:20 Mossberg: Why sell hardware like the Kindle?
Bezos: How we get there is by putting our customer's needs as a priority instead of what we're already good at. You need to renew yourself with new skills. When we looked at ebooks, you needed a microscope to find the sales. What we thought is that what people needed was a frictionless way to buy ebooks. And that required us to build a whole new skill set that would take us like 10 years.
8:22 Mossberg: We're in an time where you need to have factories to make hardware.
Bezos: We hired people who knew what they were doing but it still took them time to work as a team. Books needed to be cheaper, too. And we have a competency that is making the experience easy to use.
8:25 Mossberg: I liked the seamlessness of buying books, even though I had hardware reservations. How many have you sold?
Bezos: We haven't shared this number before so maybe it qualifies as news for you...Kindle sales are 6% of books on the 125k titles available on Kindle.
8:27 Mossberg: Why did you sell out?
Bezos: We underestimated. And we're dropping the price to $359 from $399. Mossberg: Clearing stock for a new model?
Mossberg: How many versions? Bezos says many more.
8:28 Mossberg: Kindle is the best ebook reader and I've seen them all. It's the best because of the back-end service, like the iPod and iTunes. But what about the whole idea of people reading on a screen with navigation controls? Are you convinced that books will be shifting to digital formats, as newspapers are?
Bezos: Yes, but books won't go away much like horses won't go away. (Crowd laughs.) It's hard to find a tech that's stayed in its original form for 500 years. And anything around that long is going to be hard to improve. But that's what we see with Kindle, even though the book has stayed the same for 500 years. And Kindle is good, because it disappears as you get into the flow of the story.
Mossberg: Unless the leather case falls off.
Bezos: Right! There are things about old books, like loud pages turning when your spouse is sleeping, or the book gets too heavy over time; Kindle is 10.3 ounces. It can't beep at you, like this microwave I had that at 30-second intervals would beep over and over again after my food was done. I call those self-important devices! I'll get my food when I'm ready! But you can't outbook the book, so you have to improve on it, doing things like dictionary lookup. And changing the font size, very simple thing but much appreciated. But there are big whoppers like delivery of a book in 60 seconds. Mossberg: To me, that's the thing. You guys should have made a better case, but that is the brilliant stroke.
8:33 Mossberg: Could you separate Kindle's whispernet from Sprint?
Bezos: We have to think globally, so yes.
8:34 Mossberg: Are you going to have handwriting recognition?
Bezos: There are issues with using a stylus on an e-ink display, and putting something like a digitizer causes visibility reductions.
8:35 Mossberg: People love books and the tactile feel of them.
Bezos: Yes, people love horses but aren't going to ride them to work. We're trying to improve on books.
8:38 Mossberg: This is your first hardware device. How do you limit feature creep and define the product?
Bezos: This is purpose-built for reading. If people want features and they don't detract from that, then we'll consider them.
Mossberg: What about web browsing?
Bezos: E-ink is not great for that without color and bad refresh, etc. But e-ink is unsurpassed for reading.
8:41 Bezos: You might consider the web the ultimate book that you'd choose over everything else.
Mossberg: You might want to go to Amazon.com and order the Kindle Shoe Edition.
8:43 Bezos: When we talk about making products, we talk as missionaries, because missionaries make better products. Someone asked me how much we would spend on making Kindle and I said, how much do we have? We wanted to do this right. Now that 3g and e-ink are coming together, Kindle has a place in the world. The server side too. There are a lot of pieces being pulled together.
8:45 Mossberg is talking about downloads. How serious is Amazon?
Bezos: Very serious. There are a lot of competitors. And music and movies have that glamour element, which is unfortunate, because it attracts people (competition).
8:47 Bezos just announced a web streaming video download service. The system would be pay based.
8:48 Bezos: We've got 5.2 million tracks in MP3 format.
8:49 Mossberg: Are the studios right to be fighting with Steve Jobs?
Bezos; I'd frame it differently and say it's in their best interest to have a multitude of partners and distributors.
Mossberg: I think you're the best positioned to challenge them, even if your marketshare is low.
Bezos: If you're a content owner, you want to get it out there in as many ways as possible. That's why you make chocolate and vanilla.
Mossberg: So iTunes is going down?
Bezos: Laughs, "That's not what I said."
8:51 Mossberg: Can you talk about your cloud storage and computing product, S3? Bezos: These are our infrastructure web services. They allow you to build services in the cloud without owning any hardware. We live in a weird era now, and people build their own data centers. I went on a tour for a 300-year-old brewery, and 100 years ago, they had to make their own generator to make their own power. It didn't make their beer any better to make their own electricity, so they went on the grid as soon as possible. This is just like that. You can scale up and importantly, scale down.
8:53 We had a client who went from five users to 5000 users in three days, and then back down a bit, and you can't scale that if you own your servers.
8:54 Mossberg: Why are you doing this? Will Walt think of Amazon as the people who made elastic computing huge instead of the retail giant in a few years?
Bezos: If you're a programmer, maybe. It could be a meaningful thing for us over time, especially if you are an engineer.
8:57 Mossberg: The economy, are you worried about it?
Bezos: Our business is doing well and there are some things that help us in this economy, as we've been obsessed with low prices for a decade, and as gas gets expensive, driving a 2,000 pound car to pick up five pounds of stuff.
Mossberg: But your packages come in a truck, too.
Bezos: But a route by a postal worker or other is more efficient.
8:59 Questions by the crowd: What about Kindle's DRM? Why, when Amazon does MP3s without drm. The default on Kindle is DRM free, but publishers get to choose. You can't loose things on the Kindle, because we store your books on the cloud. Without thinking about it, you can delete anything on a Kindle and not worry about it. We have the rights from the publishers to let you redownload it again. With music, we had to work with the IP owners over three years to get to the DRM free solution. My own view is that DRM free would not slow down sales.
Man in Crowd: But if you go to another reader, you lose your copies.
Bezos: At the end of the day, it's their decision.
9:02 Another little question: Amazon.com keeps recommending the Kindle to me, even though I own it. That pisses me off.
Walt: That's because you only own one.
Man in Crowd: How good are you at personal recommendations, and are you going to get better?
Bezos: We've been working on it for 12 years and we still make dumb recommendations, but we're pretty good at it. We're trying to create serendipity. Say you're coming to the website and 1-in-100 times a person says "I really like that!" [The challenge is for us] to take that 1% chance and take it to 2% and then 3%. (He's making the numbers up but that's the philosophy.)
9:05 Question: Why should we have different boxes for movies and music?
Bezos: I believe it's intermediate; one day, this stuff will be built into TVs.