Market Can Support ‘Lots of Winners,’ Bezos Says Day After Apple Cloud Launch

Amazon added 410,000 titles to its e-book library in the past year, CEO Jeff Bezos said during the company’s annual shareholder webcast Monday. The Amazon library grew from 90,000 when the first Kindle was launched in November 2007 to 950,000 in May 2011, he said. The number doesn’t include “millions” of out-of-copyright, pre-1923 books available for free, he said. The growth rate for print books is still positive, and Amazon e-books are now outselling print books, resulting in the highest book sales growth rates in more than 10 years, he said.

Regarding Amazon’s reaction to Apple’s iTunes cloud-based service announced Monday, Bezos said “there will be a number of offerings for consumers to help them manage their digital assets. These are big market segments that can support lots of winners.” Amazon will stay focused on the “customer experience” and Bezos expects “there will be other winners as well,” he said.

Bezos deflected a shareholder question on current Kindle shortcomings and what the company is focusing on with product improvements in future products. In response, Bezos reiterated the company’s “straightforward approach” with Kindle to “have the best purpose-built e-reader, the best e-book store and best ecosystem so you can read where you want to.” In a dig at Apple, he mentioned “other companies that don’t allow their digital content to be played on competitors’ devices.” Bezos cited Whispersync, a Kindle feature that allows users to read an e-book on an Android phone, stop and then pick up the book where they left off on a Kindle later in the day. “The ecosystem approach is the right one because it seems like what our customers would want,” he said.

Looking out 10 years, Bezos envisioned a far improved mobile Web browsing experience, which he said is “marginal” with average phones and cellular connections today. Bandwidth will improve and “smartphones are going to get smarter,” he said. As “unbelievably good” Web-browsing devices come on the market in the future, smartphones and tablets will serve as a “huge tailwind for Amazon” and its retail business, he said. Most Amazon customers currently shop from desktop or laptops, but they assume a different posture with tablets “where they're leaning back on the sofa,” which Bezos sees as an additional posture for online shopping.

What won’t change in 10 years is that consumers will still want deep selection of products, low prices, speed of delivery and convenience, Bezos said. He said Amazon has to reduce defects to reduce costs so it can continue to meet consumer demand for low prices.

In response to a shareholder question about what Amazon is doing to protect its network and customer data in light of the recent hacking of Sony’s PS3 network, Bezos said the subject is one the company “spends a significant amount of time thinking about.” He said “every year the bad guys get better” which means “we have to get better.” There will never be a time when “civilization will say it has defeated cybercrime.” Bezos said. “There will always have to be a concerted effort to stay one step ahead of them."

Regarding the possibility of national legislation to resolve the issue of online retailers charging and turning over sales tax to local and state governments, Amazon’s public policy office in Washington, D.C. “has supported the simplified sales tax initiative for years,” Bezos said. “The economy is a motivating force to have some action on that so we'll see. The company is working on it,” he said. More than half of company sales are currently subject to sales tax in states where the company has physical operations, he said.