Someone's taking all the rumors about Apple introducing a tablet/slate computer/digital reading device pretty seriously.

On Wednesday, Amazon.com more than doubled the royalties it offers authors and publishers using its Kindle self-publishing system.

Today, the Seattle company went after Apple developers and others building applications for mobile devices, opening up the Kindle to outside developers and providing them with a new Kindle software developer kit.

"We've heard from lots of developers over the past two years who are excited to build on top of Kindle," Ian Freed, Amazon Kindle vice president, said in a release. "The Kindle Development Kit opens many possibilities -- we look forward to being surprised by what developers invent."

Early participants include games giant Electronic Arts, which Apple has used in the past to show off the gaming capabilities of the iPhone and iPod Touch.

Other applications being developed now include a Zagat guide and casual games from Sonic Boom. Amazon said the applications will be available in the Kindle store "later this year."

Apple hasn't said anything yet about the tablet computing device it's expected to announce on Jan. 27, although its success would depend on Apple's ability to make it an attractive platform for software developers whose applications were key to the iPhone's success.

Among all the stories speculating on Apple's device, the definitive one so far is today's piece in the Wall Street Journal that describes how the company's been talking to book publishers, newspapers, magazine publishers and movie and TV companies about getting content onto the device (including media conglomerates such as News Corp., the WSJ's parent company ...). Its sources say the device will have about a 10-inch diagonal screen and cost around $1,000.

The device may also have some of the standard applications that come with touchscreen PCs such as "sticky notes" for posting messages on the shared device.

One tidbit in the WSJ story that stood out was Apple's plans to offer an online version of the iTunes store that it would proliferate with "buy this song" type buttons that could be added on all sorts of Web sites - replicating Amazon's online store and affiliate program.

Amazon has long worked with Web developers who use its commerce and online computing platforms, but it has been obsessive about controlling the Kindle and the experience it provides to users.

Today's announcement suggests the company's not opening up much -- it's limiting access to the Kindle developer kit and imposing various controls on its usage, which won't help woo iPhone developers. From Amazon's release:

Starting next month, participants in the limited beta will be able to download the Kindle Development Kit, access developer support, test content on Kindle, and submit finished content. Those wait-listed will be invited to participate as space becomes available. The Kindle Development Kit includes sample code, documentation, and the Kindle Simulator, which helps developers build and test their content by simulating the 6-inch Kindle and 9.7-inch Kindle DX on Mac, PC, and Linux desktops.

Apple's reportedly haggling with book publishers over deals to put their content on the slate computing device the company's expected to announce next week.

But it's not the only "A" company that's hustling its book platform this week.

Amazon today announced new royalty rates for books distributed via its Kindle platform, offering authors and publishers a 70 percent royalty after distribution costs, as long as they keep their Kindle editions priced below $9.99 and 20 percent less than paper editions. The rates apply to authors and publishers using the company's self-service Digital Text Platform for self-publishing.

Whether that rebuffs Apple is unclear as the new royalties are aimed at smaller publishers using the self-publishing platform. The price limitations attached the royalties are also a sore spot for publishers, according to a Publisher's Marketplace story relayed by Bookseller.com's on Apple's talks with publishers:

"What is clear is that US publishers are desperate to combat the $10 Kindle price tag pushed by Amazon.com, and believe that if enough weight is given to it other retailers will be forced to follow. But PM notes that Amazon executives are also in New York meeting with publishers and agents this week with "simultaneous ebook release of new titles and pricing" foremost in their minds."

Apple would be the latest of many competitors challenging Amazon's nascent Kindle business, with more reading devices being introduced by startups with intriguing new technology and consumer electronics giants such as Sony and Samsung.

But with the hardware's evolution still in its early stage the real battle now is over whose standards and publishing tools will dominate the business. Will Amazon, Apple, Google or someone else run the iTunes of publishing?

Amazon's Digital Text Platform terms have offered a 35 percent royalty after various charges. Its press release suggests publishers generally receive about a 25 percent royalty for books

"Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books," Russ Grandinetti, vice president of Kindle content, said in the release. "We're excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books."

All they need now is a color, touchscreen Kindle. Or maybe just a nice Kindle app for the Apple iTablet.

Akamai has fascinating dashboard showing how crazy the cyber Monday traffic has become: It's approaching 8 million visitors per minute -- 39 percent higher than normal -- at the company's sample of 270 global e-commerce sites:

Not because Amazon.com is getting into the grocery business, but because both are tied in a poll running through Thursday for MarketWatch's CEO of the Year.

It's a dead heat between Webmeister Bezos and Whole Foods Chief Executive John Mackey, who also knows his way around an online forum ...

Amazon.com today announced a free version of its Kindle reader software for Windows PCs, a big step toward Jeff Bezos' goal of getting the software on all sorts of devices.

With the mini-bookstore loaded on your computer, you can buy Kindle versions of books from Amazon and access your Kindle collection from the Web. The software also keeps track of how far you've read and synchronizes your progress with your various Kindle devices.

There's also a feature that may be of interest to business and education Kindle users. Annotations and bookmarks created on a Kindle can be viewed on a PC directly through the application.

The app also supports touch gestures on Windows 7 systems with touchscreen hardware. Users can "pinch" with fingers to zoom in and out of text and turn pages by swiping a finger across the screen.

A Mac version is "coming soon." The company earlier released a version for the iPhone.

PC users don't need a strong machine to download and run the software. Here are the minimum system requirements:

-- A PC with a 500MHz Intel or AMD processor or faster.
-- At least 128MB of RAM.
-- Screen resolution of 800 x 600 or greater.
-- Windows XP Service Pack 2 or later, or Windows Vista or Windows 7.
-- 100 MB of available disk space.

Companies releasing e-books seem to be telling people to hold off buying a Kindle this holiday, because cool options are coming soon.

Today's e-book teases include a new Google Android-powered model with dual displays, a new Irex reader with access to 1,200 newspapers, and a business-oriented touchscreen reader that Barnes & Noble partner Plastic Logic promises to show at the Consumer Electronics Show in January.

The Android model will be available by year-end from Spring Design, a Fremont, Calif., company with engineering offices in Taiwan and China.

Spring calls its reader "Alex." The device has both a monochrome e-ink display and a smaller, color LCD display, plus WiFi and 3G Web access.

I wonder if the dual displays were inspired by the Nintendo DS. Either way the colorful LCD is a big departure from the minimalist, no-distractions design philosophy of the Kindle and other current e-books.

The company's release said it's "currently in discussion and enlisting major content partners and plans to release the Alex device for selected strategic partners by the end of this year." I wonder if Google and its new e-bookstore is one of those partners; I was led to the release by Google guru Matt Cutts' Twitter feed.

A bit more from Spring's release:

Ideal for professional, educational and entertainment markets, Alex dynamically transforms the reader's experience with images, videos and notes inserted as 'Web grabs' or with custom text created by the user or other secondary authors pertaining to the subject being displayed. Users can create their own images and notes and capture them to augment the original text or just dynamically grab relevant content with Link Notes, Alex's innovative multimedia authoring tool to enhance multimedia publishing.

"This is the start of a whole new experience of reading content on e-books, potentially igniting a whole new industry in multimedia e-book publishing for secondary authors to create supplementary content that is hyper linked to the text. We are bringing life to books with audio, video, and annotations," said Dr. Priscilla Lu, CEO of Spring Design. "This gives readers the ability to fully leverage the resources on the Web, and the tools available in search engines to augment the reading experience."

The company didn't disclose pricing, but said the Que will connect to the Barnes & Noble e-bookstore. The device will be 8.5 by 11 inches, less than a third of an inch thick and connected via WiFi and AT&T 3G service.

As for the name, Plastic Logic Chief Executive Richard Archuletta said in the release that the "QUE brand stands for a premium reading experience. The QUE proReader enhances business performance and gives you a competitive edge. More than an eReader, QUE means business."

Plastic Logic's teaser image:

Irex is less vague about its new reader.

The DR800SG with an 8.1-inch diameter screen and leather cover is going on sale at Best Buy stores this fall for $400, which includes Verizon wireless Internet access.

Irex announced the device last month and today said it's partnering with LibreDigital and NewspaperDirect, which distribute electronic version of newspapers and magazines. Its device also points uses to the Barnes & Noble store.

My first question after seeing that online computer store Newegg is going public was: How many geeks are going to think they deserve friends and family shares?

Then I wondered if Newegg tried selling to Amazon, or hopes to sell before the IPO goes through.

Newegg really is the geek's equivalent of Zappos, the online shoe store that Amazon bought in June for nearly $900 million. And Newegg is trying to raise only $175 million, according to Reuters.

City of Industry, Calif.-based Newegg claims to be the second-largest online-only retailer in the U.S. and reported sales of $2.1 billion last year. That's twice the purported volume of Zappos.

It also claims to have a sophisticated delivery system and a huge base of loyal customers, with 12 million registered users. In short, key attributes of Zappos, minus the latter's quirky, progressive culture.

What am I saying -- if Amazon bought them, Newegg customers around here would have to start paying sales tax ...

Maybe now it's an actual competition between Amazon's Kindle and Sony's forlorn "Reader" e-book.

Sony today announced a new larger-screen model going on sale by Christmas for around $399. The Reader Daily Edition (aiming to deliver newspapers, perhaps?) has a seven-inch-wide touchscreen and includes 3G wireless service from AT&T.

But it's Sony's new software and services that are going to change the dynamic.

Sony also said it's partnering with OverDrive, a company that distributes electronic books to libraries, so Reader users will be able to "check out" free digital library books that expire at the end of the lending period. That's a much bigger deal than the earlier announcement that Sony's working with Google to bring public domain material to the Reader.

If you're a heavy book buyer looking for a digital reader, Amazon's big selection may still pull you in.

But the Kindle will be marginalized if e-books from Sony and others get enough books from a wide variety of sources, especially free and current titles from libraries. Would Amazon ever make it easy to borrow instead of buy books on the Kindle?

Here's another picture from Sony, showing it's current Reader lineup, including the Daily at right:

Nicholson Baker, the novelist who battled to save card catalogs from digitization in 1994, takes on Amazon.com's Kindle in the Aug. 3 New Yorker.

He's pretty skeptical, especially about the Kindle's promise for newspapers. His take after reading the New York Times on the device:

A century and a half of evolved beauty and informational expressiveness is all but entirely rinsed away in this digital reductio ... The Kindle DX ($489) doesn't save newspapers; it diminishes and undercuts them -- it kills their joy. It turns them into earnest but dispensable blogs.

Amen.

But my favorite line is his summation of the media buzz around the Kindle:

Everybody was saying that the new Kindle was terribly important -- that it was an alpenhorn blast of post-Gutenbergian revalorization.

Apple is apparently sharing details of its long-rumored tablet device with media companies, including book publishers hoping to get their content on the Kindle competitor due to launch by the holidays, according to a big scoop in the Financial Times.

No wonder Amazon.com has been slow to respond to problems with cracking Kindles and abruptly deleted copies of electronic books:

The Kindle team's probably been in full freakout mode, bracing for the all-out attack on the electronic book business that Barnes & Noble announced today.

BN said it's partnering with Plastic Logic, the startup preparing to launch an 8.5 x 11-inch electronic reading device early next year.

But like Amazon, BN is doing more than a gadget. It's rolling out a whole electronic book strategy, including a catalog with 700,000-plus $9.99 titles that it calls "the world's largest selection of eBooks available in one place."

Also announced was a new e-reader application, connection to Google's open books collection and plans to bundle its reader with a handful of classics and reference books.

Among the sites covering the news, ZDnet reprinted a nifty Forrester chart showing the competitive landscape.

After countless calls and e-mails, Amazon.com finally responded to the story we broke Tuesday about a Seattle customer suing over Kindles being damaged by their protective cover.

Amazon will now replace Kindles cracked by the cover for free, instead of charging $200 and excluding this problem from warranty coverage, spokesman Andrew Herdener said.

Herdener would not comment specifically on the lawsuit, though. His statement:

We do not comment on active litigation. Nevertheless, we encourage anyone who has an issue with the cover attachment mechanism to return the cover and device for a free replacement so we can investigate further.

That won't stop the lawsuit, however:

You've heard about cracking open a book, but how about cracking open a Kindle?

Apparently this is happening to some owners of Amazon.com's electronic book who also bought the optional, $30 protective cover, including one unhappy gadget lover who filed a federal lawsuit today in Seattle.

It's still a wild rumor, but some are speculating that Amazon.com may buy Netflix.

Netflix closed up 5 percent at $42.19 and options trading soared on the stock, according to a Bloomberg report. AMZN closed up 5 percent to $81.47.

One analyst quoted in the story said it's unlikely, because Netflix distribution centers in different states could complicate Amazon's efforts to avoid sales taxes in different regions.

But the sales tax games are probably short term and Amazon probably overlaps in some of those states.

Long term, Netflix would give Amazon's digital download business a huge presence that it may never obtain otherwise.

Netflix has made deals with all sorts of TV, console and set-top box manufacturers, putting what are basically mini-storefronts in living rooms across the country. Amazon is doing the same thing with companies like TiVo but Netflix is way ahead.

Maybe the deal would expedite the development of Kindles that support streaming video ...

Get ready for a new kind of ad that may appear when you search with Google.

The company is inviting advertisers to help test new "product ads" that display photos and prices of products for sale, including specific offers based on your search. It's a new program that looks like a response to Microsoft and a challenge to Amazon.com.

These new ads could change the look of Google search results, if you're using the site to look for information about products. The testing is going to begin soon in just a few, unspecified areas of the U.S.

But the program is apparently designed not to change the consumer experience as much as give companies using Google's affiliate program more options to sell their wares.

It's probably been in the works for a while, but the timing is interesting, coming as Microsoft repositions its Web search service as a better tool for shopping. Microsoft's Bing search service includes a number of product shopping features for consumers and vendors, returning product images, prices and specific offers when you search for, say, an Apple iPod.

Google product ads may also increase tension with Amazon.com, by giving companies a new alternative to Amazon's affiliate product marketing program and a product search ad program the retailer started last year. (I wonder how commissions will be divvied up on Amazon product ads placed by Google?) It could also be a significant challenge to smaller, product-oriented ad networks such as Seattle's WidgetBucks.

Google Product Ads will appear as sponsored links, separate from the Google's AdWords text ads.

A company spokeswoman initially said the "experiment" began a few weeks ago, then clarified that it has not yet begun, and provided the following statement:

"At Google, we're constantly experimenting with new features, tools and visual representations to improve the user experience and usefulness of our ads. In accordance with that philosophy, we're planning a beta test to show richer product information in the ads for shopping-related queries. This test will only be visible to a small number of U.S. users."

Microsoft and Amazon declined to comment.

An invitation to the beta includes FAQs with this explanation of how product ads differ from Google's AdWords:

"Product ads represent individual offers with product information directly in the ad itself. Unlike keyword targeted text ads, product ads appear when the user's query matches information provided in your product feed. During the beta, product ads are shown independently from text ads."

Google is encouraging testers to be aggressive with the commissions they pay to sites that display their product ads. Its pricing advice:

You specify the commission rate for conversions that take place via clicks on Google product ads. Minimum pricing is your standard publisher rate, plus the network fee. To maximize your competitiveness among advertisers participating in product ads, we recommend a higher commission with the Google product ads relationship.

Google's affiliate program is based on the DoubleClick Performics Affiliate it acquired in March 2008.

I was pretty excited about Amazon.com's supersized Kindle, the DX model it began selling last week.

But after spending a week fiddling with a test unit loaned by Amazon I'm not sure it's worth the extra $130 over the price of a standard Kindle. The DX costs $489 vs. the standard $359 model.

Amazon is aiming the DX particularly at college students. It's working with textbook companies and plans trials at universities around the country this fall.

I wonder if students would prefer the smaller Kindle, though, and not just because it's less expensive.

The DX screen is about the size of a hardback book, compared with the paperback-sized screen on the standard Kindle.The DX also has double the storage -- 4 gigabytes -- and on-board support for PDF documents. They both use 3G wireless service to download books, newspapers, blogs and other material.

But there are some tradeoffs for that bigger screen. For one thing, it seems to burden the processor more -- page refreshes seem slower. A spokeswoman said the DX uses the same processor as the smaller Kindle.

Amazon also added an auto-rotate feature, so the screen shifts to a horizontal mode when you turn the DX sideways. I found it maddening. It takes just a little too long to rotate, and you have to really tilt it upward sometimes to get the rotation going.

But the thing I missed the most was the compactness of the previous Kindle, which has a better blend of power and portability. It's small enough (8 x 5 inches) to stuff into a large pocket and easily hold with one hand. The DX, meanwhile, is like a thick clipboard that needs backpack or briefcase to conceal.

Even though it's more of a two-handed device, the DX only has page-turning buttons on the right side. The standard Kindle has page buttons on both sides of the screen, so you can read while holding it in either hand.

Maybe my problem is with other comparisons prompted by the larger device. The slim, standard Kindle is kind of a marvel. On such a little gadget, it's a surprise how readable the screen is and how much technology is stuffed inside.

The DX brings to mind slate-style PCs that are just a little bigger (the DX is 10.4 x 7.2 inches and 0.38-inch thick) but more powerful, with color screens that take pen and finger input. That may not be a fair comparison -- the Kindle is only trying to be a reading device and it's thinner -- but it's hard to shake the association.

If you're going to carry around something this big, and devote that much space in the backpack, you may expect more than a black-and-white reader with a rudimentary browser, a weak MP3 player and an oddly spaced keyboard.

Newspapers are especially interested in devices like the Kindle that can deliver their content to subscribers. Some readers say they like papers on the Kindle but I think it has a ways to go, and the DX isn't much better.

The problem for me is that you can't quickly scan and skim across a page -- the Kindle presents one story initially, or you can click a few times to see the first sentence and headlines from six stories at a time.

The built-in PDF software could help here, though. The DX can display the PDF of a full newspaper page, big enough to read everything, if you squint a bit.

Perhaps I'm jaded or too caught up in the handheld gadget thing.

I've got to say that when I showed the Kindle DX to a group of people who had never seen any Kindle before, they were impressed and excited by the possibilities of the device. They didn't mind the size or miss the left-side button.

Maybe there's demand for a whole lineup of Kindles -- coupes, sedans and pickups, whatever size you need -- but hopefully the big ones will get more powerful engines. And they all desperately need lights, so you can use them in the dark.

After spending five years and billions on development -- including early research at the University of Washington -- IBM today announced its enterprise cloud computing services.

IBM is starting with three offerings that further stretch the definition of cloud computing, a term loosely applied to big, scalable computing systems accessed on demand via the Internet.

Now IBM is offering to install "private clouds" for companies in-house, behind their firewalls.

One version is a "test cloud" that enables companies to develop and test applications in-house, instead of renting time from companies such as Amazon.com, Microsoft or even startups such as Seattle's Skytap.

IBM is also offering a bundle of development and test tools that can be used on IBM's cloud -- a network running on 13 datacenters located around the globe.

Or companies may now order a turnkey cloud computing system from IBM, called "CloudBurst." It's a 42-unit server cabinet that comes preloaded with hardware, storage, virtualization, networking and service management software.

(Here's IBM Innovation Systems Engineer James Thoensen with a CloudBurst prototype -- Cloud in a Box? -- in an IBM-supplied image)

Some customers would prefer a more tailored, integrated cloud setup than a "smorgasboard of different siloed systems,'' said Dennis Quan, IBM's director of autonomic computing development in Raleigh, N.C..

"You have bunch of systems that co-exist in datacenters, but they don't act like a system, a single system, and enterprises spend a lot of time having to integrate the different software systems together,'' he said.

There's also going to be a need for more "fit to purpose" clouds, especially if datacenters are strained by the flood of new data. Some 15 petabytes (15 quadrillion bytes) of information are being created daily -- mostly by consumers -- but companies are responsible for maintaining 85 percent of it, according to IBM.

Blueprints for IBM's cloud offerings came from a joint research project with Google. It initially explored business intelligence at big schools and large-scale analytics, and led to the creation of a cloud computing cluster at the UW and two run by IBM in 2007.

"The work that was done as part of that project really informed how we can put together large cloud datacenters that can efficiently process terabytes, petabytes, of information across thousands of machines,'' he said.

The early clusters also "kind of provide the bluepints for the designs we base these new clouds on,'' he said.

What's crucial is the service management systems that make the cloud systems work -- Quan said it's like the orchestra conductor, or "an operating system for the 21st century datacenter."

Here's an edited excerpt from the interview with Quan:

Writing for Time magazine, Bill Gates penned a glowing profile of the guy who lives a few mansions down in Medina, Jeff Bezos.

Gates wrote the piece for Time's listing of the 100 most influential people. (I found the link via Silicon Alley Insider).

Apparently Gates is pretty impressed with the Kindle. I hate to spoil the ending, but Gates said the device and its effect on books could put Bezos "in the same ranks as Johannes Gutenberg."

Here is some of the material that influenced today's column on Twitter and social media, plus a few other things.

Clay Shirky's blog on the failure of the Amazon.com gay-themed books protest:

I was wrong, because I believed things that weren't true. As bad as that was, though, far worse is the retrofitting of alternate rationales to continue to view Amazon with suspicion, rationales that would not have provoked the outrage we felt had they been all we were asked to react to in the first place.

The New York Times on "ghost twitterers":

In its short history, Twitter -- a microblogging tool that uses 140 characters in bursts of text -- has become an important marketing tool for celebrities, politicians and businesses, promising a level of intimacy never before approached online, as well as giving the public the ability to speak directly to people and institutions once comfortably on a pedestal.

But someone has to do all that writing, even if each entry is barely a sentence long. In many cases, celebrities and their handlers have turned to outside writers -- ghost Twitterers, if you will -- who keep fans updated on the latest twists and turns, often in the star's own voice.

Because Twitter is seen as an intimate link between celebrities and their fans, many performers are not willing to divulge the help they use to put their thoughts into cyberspace.

Bloomberg on Twitter users getting spammed by marketers, tells the story of new Twitter user Rachel Gard:

Gard, who was planning to paint her bedroom gray with red pinstripes, posted an update April 1 telling her friends that she needed to shop for paint at Home Depot, Lowe's or Ace Hardware. Within 15 minutes, Home Depot sent Gard a message on Twitter wishing her luck and telling her to let them know if she needed help.

Days later, when she complained about an ear infection, she got a message from Eardoc, which sells a device for treating ear ailments. The company sent Gard a message saying, "Fast and safe relief for ear infection is Eardoc."

"I was like, 'What?" Gard said. "I was really confused. I didn't even know businesses did that."

From a Los Angeles Times story today warning companies to start Twittering (or hire consultants and P.R. firms?) to protect their brands:

"There's a mob mentality to social tools where people quickly try to put fuel on the fire, really encouraging brand damage and damage to individuals," said Jeremiah Owyang, a senior analyst at Forrester Research.

A blog entry by Somerville, Mass., programmer Paul Lamere examining how a group of Web enthusiasts were able to precisely manipulate Time magazine's online poll of the world's most influential people. Instead of reflecting public sentiment, the poll, for a time, spelled "marblecake also the game":

It has always seemed to me that such coordinating manipulation was a blunt instrument. The commanded horde could push a specific item to the top of a poll faster than a Kansas school board could lose Darwin's notebook, but the horde lacked any subtlety or finesse. Sure you could promote or demote an individual or issue, but fine tuned manipulation would just be too difficult. Well, I've been proved wrong.

Don't feel too bad for Jeff Bezos getting Twitsmashed for the miscategorization snafu: The Amazon.com boss is hedged -- he's also an investor in Twitter.

Actually it was politicians and Paul Allen's development team that did the ceremonial shovel thing this morning at Amazon's immense new headquarters.

Construction started a year ago on the 10-building, 1.7-million-square-foot campus just south of Lake Union. Amazon employees will move into the first buildings next May and the whole thing will be done by 2012.

"This is what a community is about, this is what this community is all about,'' Gov. Chris Gregoire said before she, Mayor Greg Nickels and City Councilwoman Jan Drago wielded the golden shovels in a sandbox erected just for the show.

The campus takes up about a third of the 5 million square feet of space Paul Allen has amassed in the formerly blue collar area between downtown and the lake. Allen and Jeff Bezos didn't make the event; maybe they were toasting each other on a boat somewhere.

Look how fast those politicians dig! Here they are in the parking lot on the upper left:

Another angle of the world's largest bookstore's new home, looking toward the lake:

I thought the new administration was going to tone down the jackboot attitude of federal agencies that blossomed during the perpetual war on terror.

But apparently word hasn't yet reached public servants at the FBI office in Dallas.

According to a shocking Wired story, the feds responded to a debt collection spat between AT&T, Verizon and VoIP customers by seizing hundreds of servers from multiple co-location facilities, as well as the iPods belonging to a debtor's kids and even the savings of a former comptroller's grandmother.

More than 300 companies were using servers at a facility owned by alleged debtor Mike Faulkner, the story reported:

Faulkner says the two telecoms have used the FBI to seize equipment to obtain evidence through a criminal investigation instead of pursuing the companies through civil litigation and the discovery process. And instead of targeting the investigation specifically at the VoIP companies, he says the FBI swept in everyone who had servers in the same place where the VoIP servers were located. As a result, all of Crydon Technology's equipment was seized, as was the equipment of numerous businesses that had the bad luck to own servers running out of Crydon's facility.

"They're destroying more and more customers and it just doesn't seem to make sense," Faulkner says. "They've done a horrible amount of damage and have been so barbaric in the way they've shut things down. If they just picked some random guy off the street to do this investigation, he could have done a better job than the FBI did."

When one of the affected companies, a credit card processor, "tried to explain to an FBI agent that some of the servers that were seized belonged to him and not to Faulkner, the FBI agent implied he was lying,'' the story reported:

"We were treated like we were criminals," he said. "They assumed there was no legitimate business in there."

Amazon.com CTO Werner Vogels seized the opportunity to suggest, on Twitter, that this is another reason to consider using cloud servers such as those rented by Amazon Web Services. Does Amazon have protection from this kind of thing? What if the RIAA takes exception to the DRM free music Amazon's distributing from its servers and calls the feds?

So Jeff Bezos is filling in on Amazon.com's distribution line, which just sacked 210 employees.

He's spending a week checking the pulse at a shipping facility in Kentucky, where the newspaper asked if readers had seen the billionaire leprechaun.

I wonder if he carries a special "inspected by Jeff" rubber stamp.

Maybe it's time to start paying more attention to who is driving those Amazon Fresh trucks around town. I thought I saw Brian Valentine behind the wheel the other day.

Erik Selberg deosn't blog very often, but it's usually worth reading when he does.

Late last night, he gave Microsoft's search efforts a bittersweet raspberry. He also questioned why Microsoft isn't being bolder and more aggressive.

This isn't cross-town rivalry: Selberg was a senior engineer on Microsoft's search team and a founding member of its Live Search Labs before he left for Amazon.com in 2007.

Selberg starts off by saying that Microsoft's search product "is pretty much the same as when I left" and he's not too optimistic about the "Kumo" rebranding:

I admit, I'm a fan, and Microsoft's recent actions have left me feeling... well, let's just say the peanut gallery is unimpressed.

No, it's worse than that. The peanut gallery is disheartened, and disappointed.

Selberg hoped that Steve Ballmer "would come out fighting." Instead of laying people off, Microsoft should be investing heavily, gearing up for when the economy recovers, he said:

"Because of Microsoft's diverse, and somewhat inelastic, revenue streams, Microsoft could do this. Microsoft was not going to be just another company hunkering down, Microsoft was going to invest for the future. And when that future came, Microsoft would be in a prime position to take advantage of the situation.

At least, that's what I had hoped for. Ah well."

Fujitsu just introduced what may be the ultimate eBook.

Unfortunately, it's available only in Japan and costs $1,036. Fujitsu began taking orders today for deliveries starting April 29.

Called the FLEPia, the device is a smorgasbord of nearly every feature you can think of for a digital book.

It has an 8-inch-diagonal screen that displays up to 260,000 colors in high definition. It loads books wirelessly -- via Wi-Fi, Bluetooth or connections to multiple cell networks.

Books can be ordered from Japan's largest online bookstore, and up to 5,000 volumes can be stored on its 4 gigabyte SD memory card.

Like the Kindle, it has amazing battery life: up to 40 hours of continuous operation, and a screen that doesn't need power to hold an image, "consuming power only during re-draw,'' according to Fujitsu's release. Specifically, a single charge can display 2,400 pages at 1 page per minute with 64 colors shown.

"As the only color e-paper mobile terminal commercially available, FLEPia offers a convenient, paper-free and eco-conscious enriched innovative mobile reading experience to users,'' the release said.

Fujitsu Frontech and Fujitsu Laboratories developed the color "e-paper" material and announced it in April 2007.

The device that's now on sale has a scroll key, buttons, a touch screen, a digital pen and a software keyboard.

It runs on Windows -- CE version 5.0. Fujitsu said the software enables the device to run a browser, e-mail and applications.

"Microsoft's Office can also be used to generate text documents, spreadsheets, or presentations, making it possible to view a variety of documents -- including e-mail file attachments -- while in transit or in the field and away from an office environment, thus fully maximizing FLEPia's multiple functions as a mobile information terminal,'' the release said.

It sounds like a Tablet PC with a digital paper screen.

(I'm a little late on this -- saw it on Techmeme this morning, but I've been too busy reporting other stuff in person to post.)

Highlights from Apple's preview of the new iPhone software: It's finally getting cut-and-paste capability and MMS.

Apple's also offering new tools for companies to produce digital book stores for the iPhone and subscription services through the App Store, adding some of the key business capabilities in Amazon.com's Kindle.

I wonder if the New York Times and other papers will stop offering free news apps on the iPhone, now that Apple's giving them tools to charge for subscriptions.

The 3.0 software upgrade is coming this summer. A few of the features -- including MMS and A2DP Bluetooth -- won't work on the first generation iPhone. The upgrade is also available for the iPod Touch, for $10.

This is culled from live blogs from the Cupertino event include Engadget and Eric Savitz.

Meanwhile, on the other side of the country, Amazon was sued today in Delaware by Discovery Communications, which alleges the Kindle infringes on Discovery's patented copy protection technology.

If you've got 20 percent of your day to spare, check out the latest Stevey's Blog Rants.

The amazing blog is written by Steve Yegge, a developer at Google's Kirkland office who used to work at Amazon.com.

I'm being flip about his 20 percent time. The blog's not an official Google work product, but it must take 20 percent of his bandwidth to produce gems like last night's "Story Time" opus. No wonder he posts only about once or twice per lunar cycle.

Story Time has everything -- Pike Place druggies, submariners in Idaho, adventures in Chinatown and the hilarious El Gaucho pants incident.

It's impossible to see the Kindle 2 in person, unless you buy the device or know someone who has -- it's available only through Amazon.com's online store.

So last Thursday I invited people to come down to the paper and try the review unit Amazon loaned me.

The people who showed up ranged from Web entrepreneurs and a medical student, interested in reading journals on the device to retirees who love books.

One Amazon.com employee showed up. He's not on the Kindle team, but he brought his Kindle 2, which was great because it gave people more opportunities to see and try the device.

I was planning to collect people's comments and present them as a sort of crowdsourced review, but I was too busy answering questions and explaining the device to take many notes.

Instead, here's a nice video of the event, done by Times web producer Tiffany Campbell:

The Kindle iPhone application that Amazon.com released last night is just the start.

Amazon plans to extend its digital book software -- especially the Kindle's "Whispersync" technology -- to all sorts of phones and computers, according to Chief Executive Jeff Bezos.

It's more evidence that the Kindle was built not just for reading, but for buying books. It's part of a broader effort to extend Amazon's core franchise to mobile devices.

The iPhone application makes more sense when you think of it as an extension of the Kindle bookselling platform, as well as a bargain way for iPhone owners to get a barebones version of Amazon's reading device.

But it's still a neat application and the timing -- just a week after the Kindle 2 launch -- shows how aggressively Amazon is pushing ahead.

Bezos previewed the strategy -- and the vision for Kindle on the iPhone and other devices -- in this interview at the Kindle 2 launch event last month. He said the plan was to get the Kindle digital bookstore on "just about every device."

An excerpt:

In Monday's Kindle 2 review, I said the device isn't so great for reading newspapers.

Here's another perspective, from Amazon.com founder Jeff Bezos.

This is from a video I took of him at the Feb. 9 Kindle 2 launch event, showing how to read a paper on the device.

"This is a really dramatic improvement in newspaper navigation,'' he said at one point.

Love to have him drop by this paper on Thursday evening, when we'll have a Kindle 2 available for anyone come by and try in our auditorium starting at 5:30 p.m.

There has been some great feedback to the Kindle 2 review published this morning.

I'd love to hear more about what people think about the device.

I'd also like to give people a chance to see the Kindle 2 in person, since you can't handle one before buying it from Amazon.com.

I'll have the Kindle 2 available for people to come see in person Thursday evening here at The Times. There's no schedule or presentation, just a sort of open house where you can come down and spend a few minutes trying it out. This starts at 5:30 at the main office at 1120 John St. (just a few blocks from the new Amazon.com headquarters campus that's under construction.)

Amazon.com said it's tweaking the Kindle 2 software to let authors and publishers decide whether their works can be audibly played with the gadget's text-to-speech translator.

The company is responding to concerns that authors and publishers aren't getting compensated for auditory play of their material. It's going to modify the system so copyright owners can decide which titles will have the feature enabled or disabled.

Amazon didn't back down completely; its statement insists the feature is legal:

"Kindle 2's experimental text-to-speech feature is legal: no copy is made, no derivative work is created, and no performance is being given. Furthermore, we ourselves are a major participant in the professionally narrated audiobooks business through our subsidiaries Audible and Brilliance. We believe text-to-speech will introduce new customers to the convenience of listening to books and thereby grow the professionally narrated audiobooks business.

Nevertheless, we strongly believe many rightsholders will be more comfortable with the text-to-speech feature if they are in the driver's seat.

Therefore, we are modifying our systems so that rightsholders can decide on a title by title basis whether they want text-to-speech enabled or disabled for any particular title. We have already begun to work on the technical changes required to give authors and publishers that choice. With this new level of control, publishers and authors will be able to decide for themselves whether it is in their commercial interests to leave text-to-speech enabled. We believe many will decide that it is."

Continuing its Apple-style marketing of the Kindle, Amazon.com gave four reporters early access to Kindle 2 and their reviews are surfacing today.

None raved, and they all said about the same thing: Some improvements, still a ways to go before the ideal e-book.

I'm still trying to figure out what to make of the one I picked up at Amazon HQ last night. (Here's the conversation I had with Jeff Bezos about the Kindle 2 a few weeks ago.)

Here are the first reviews from the chosen. Presumably Walt Mossberg's will run Wednesday:

Smartsheet.com co-founder Brent Frei said his Bellevue startup had its "Viagra moment" when it hooked its software to Amazon.com's Mechanical Turk Web service.

He wasn't referring to how excited Smartsheet is about the partnership. Frei was talking instead about the accidental discovery that its software was a wonderful front-end for Turk, a service that brokers projects to independent workers around the world. He equated this with Pfizer's chance discovery that a planned hypertension drug could treat erectile dysfunction.

NEW YORK - Here's a fuller, edited version of today's interview with Jeff Bezos during the Kindle 2.0 lauch event.

We talked in an ornate old parlor at the Morgan Library, built by industrialist J.P. Morgan and an appropriate setting for this century's e-commerce mogul.

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 a need 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: Are you talking about the industrial design? Our view on this is - have 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: Did you think about using touchscreen at all?

A: Touchscreen technology, it's not yet there for electronic ink. You can do it, but it significantly degrades the contrast and the visibility of the screen. The current touchscreen technologies are a layer that go on top. It's a thin, transparent layer that goes on top. Of course, it's not completely transparent. And with the reflective display like this, the light bounces through that transparent layer twice - once to get in and once to get out, back into your eye, and so you get significantly light degradation. Plus, it puts a reflective layer on top.

One of the reasons this screen is so pleasurable to look at, and doesn't create eye strain, is becauase the ink is almost right on the surface of the screen. It doesn't have any depth to it.

So there are touchscreen technologies that are starting to become available that go under the display and that might be something that someday could work. But right now it's still in the laboratory, it's still a bit of a science project. But someday, a number of years from now, you could imagine that.

Right now, you don't want a touchscreen on your reading device [if] the primary purpose of the device is reading.

Q: E-Ink plans to have some color displays out by the end of the year.

A: I've seen those in the laboratory and probably for volume production, they're still years away. But it's exciting technology.

Q: Will color be in Kindle 3.0 then?

A: I think it's actually multiple years away.

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

A: That's what Whispersync 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.

The best analogy I can give you would be a digital camera on your cellphone. I love having a digital camera on my cellphone because I always have my cellphone with me. but occasionally I want a real camera. If I'm going to take pictures of my kids or whatever, I want a real camera. If I want to read for two hours, I want my Kindle. If I'm going to read for a few minutes, then a bunch of options open up.

Q: It seems like there's a big opportunity for you if you don't require people to buy a Kindle to use the software and services.

A: The two things are separate. The Kindle e-book library will be available if you do want a device that's purpose-built for reading. You want to be able to synchronize it, that's what Whispersync is about. It's not a requirement.

Q: With the volume so big on netbooks and the devices having long battery life, I wonder if you'll develop some sort of Kindle reading application for them?

A: The way you should think about it is we're excited about making that library available on just about every device.

Q: So there will be a whole range of things that can use the Kindle software, and I'm guessing the Kindle will be the premium experience?

A: I think what you're going to find is that anybody who reads is going to want a Kindle because it's so much better for reading, but it's not either/or: Either people are going to read on their cellphones, or they're going to read on Kindle, and I don't think that's right. Just like I don't have to decide, am I going to have a real camera or am I going to have a cellphone camera?

The fact is I want both. In fact I have three cameras - I have a cellphone camera, I have a compact camera that's lightweight, if I go for a hike or something, And then I have an SLR camera that I mostly keep at home to take pictures of the kids because I want the highest quality I can get.

Q: Will you get to the point where you can read Kindle editions on other e-Books? People might be getting confused by the different devices and formats that are emerging. This might slow mainstream adoption of e-books. Will there be interoperability between them all?

A: We certainly haven't seen that.

Q: How can you overcome that confusion?

A: I wouldn't want to speculate on that.

Q: The device is nice but to me what's really interesting are the business innovations.

A: 3G wireless, bundling (wireless service fees) into the cost, making the books cost less.

I agree with you. A lot of this is about business innovation and a lot of it is about technology innovation. It's really bringing those two things together. You know when we started - now more than four years ago - only at that time could we see that the technologies were shortly going to be in place to make this possible: the combination of the electronic paper technology and fast 3G wireless being distributed, being in enough cities so it's basically everywhere today.

It's the combination of those technologies and the busienss model innovation that's making this.

I should add a third thing - which is the 230,000 titles. The best electronic reading device is useless without the books you want to read.

Q: What are you doing now to get more adoption with publishers?

A: It's been accelerating over the past 14 months. The past three months we added more than 40,000 titles to the selection so not only are we going to keep growing [it], we're going to keep accelerating the rate at which we're growing the selection. The vision is every book, ever printed, in any language, all available within 60 seconds. That's a big, long, multi=year vision to get every book ever printed, but it is possible and we will eventually do it. We'll just have to be relentless [laughs].

Q: What are you doing to make publishers speed up?

A: Publishers are excited about this - like us, they watched e=book sales go nowhere for 10 years. We kept trying to sell e-books and nobody bought them. You needed an electron microscope to find the sales.

Fourteen months ago, with the launch of Kindle 1, that changed. So I think publishers are as excited as we are about the future of e-books.

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 you look at the cost of this device - it has a sophisticated EVDO radio, it has the latest electronic display - 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: Will we see Kindle hardware subsidized through subscription deals, like, say, a book of the month club or a newspaper subscription?

A: Anything's possible. I think there is reason for optimism about newspapers on Kindle because if you look at the printing cost of newspapers, these are dramatically large expenses. There is an argument to be made that over time - and it will take some time - that printing infrastructure doesn't make as much sense as everybody having a device like this.

Q: How about the developer story - are you going to open this up more to outside software developers to write applications and load things on there?

A: I don't want to speculate on the future on that. You'll just have to stay tuned.

Q: So we might hear more about that?

A: It's possible. I don't want to foreshadow anything so you'll just have to stay tuned.

Q: Would the same go for the Kindle's browser?

A: The browser is very basic. It doesn't do Flash, for example. It's nice to have but it's not the primary reason, it's not the purpose of the device. The device is for reading. It does have a Web browser - people like the Web browser - but it's very basic functionality.

Q: How about a little more transparency with the sale numbers - are we going to start hearing how many units have been sold?

A: We're going to continue with our practice of not sharing those numbers.

Q: Wouldn't more disclosure help you sell the Kindle platform to publishers?

A: Publishers get to, at this piont, they get to see - we're sending them checks. The most important thing if you're a publisher is, are the books selling? You don't really care if the device is selling, and the books are selling.

Kindle books already are selling. If you take the 230,000 titles where we have Kindle editions - Kindle unit sales are already more than 10 percent of all our sales. For that to happen in 14 months is very surprising. It took us 14 years to build up our physical book business. Now when a title becomes available in Kindle format, it's immediately worth 10 percent of our unit sales on Kindle. That's pretty surprising.

Q: When we think about Amazon's phases of growth - first the bookstore, then the platformization of the store, then the multi-platform business with new services - where should we put the Kindle? Should we think of hardware as a new stack here, or is it an extension of the store?

A: It's a new skill. We've been working on it for four years. When you look at the engineering that is incorporated in this incredibly thin package, the team has acquired that ability.

Q: But it's more an extension of the Amazon store as opposed to an entirely new business, right?

A: The device is one thing; that's the new skill we had to learn. But the device is only a part of Kindle the service. So Kindle the service includes the largest e-bookstore in the world. Kindle as a service includes all the servers used to wirelessly deliver this content. We had all the skills that we needed to do those things. We had a lot of the pieces in place based on our 14 years of history but the one thing we needed to add to our skillset was the engineering for the hardware device itself. I'm just incredibly proud of that team.

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 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: We 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 to not 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.

Q: It seems like your company's on a roll, especially after this last quarter.

A: Well, thank you.

Q: Is Amazon going to be the "it" company of 2009?

A: I've been asked by several people, what did you do special in Q4? The fact of the matter is we did nothing special in Q4. We did the same things that we've been doing for 14 years, which is working on lowering prices, increasing selection, speeding delivery. The accumulation of those things perhaps you saw in Q4.

NEW YORK -- I may be the only technology journalist who thinks so, but I miss the big airplane-flap style buttons on Kindle 1.0.

They're gone, replaced by sleek buttons that blend right into the smoother, sexier and more modern-looking Kindle 2.0.

Kindle 1.0 was quirky and took a little getting used to, but pretty soon it felt natural -- even fun -- to turn pages by slapping, bumping or flicking the huge flap controls.

I haven't had enough time with the Kindle 2.0 to really analyze the device, but the relatively small buttons stood out after a few brief minutes playing with the device at Amazon.com's launch event today. They're still relatively big buttons, but now they're approaching the size of shift key rather than a space bar.

Following a presentation by Jeff Bezos, a handful of Kindles were put out on tables in the lobby of the Morgan Library for journalists, publishers and others in the crowd to ogle and fondle. Here's a snapshot I took of the scene, with a Kindle 1.0 on the right and a 2.0 on the left:

The device feels more dense and less plastic than Kindle 1.0, thanks in part to its Apple-esque brushed metal back.

Flipping through a few pages, I felt as if I had to aim my fingers more precisely than before. The buttons also felt a little stiffer, but the device was brand-new. Kindle users may feel less like a book geek at the coffee shop or on the bus now that the device looks more like a super-sized iPod.

Perhaps the smaller, tighter buttons are a good thing -- the Kindle 1.0's flaps had a loose feel that made me wonder how they'd hold up to years of hard use. They were also easy to accidentally brush and change pages.

Although Kindle 2.0 has a better screen, I couldn't tell with a quick look, cheek to jowl with a crowd of reporters.

The new mini-joystick/toggle control gives you a lot more navigational control than the funky scroll wheel it replaces, and nobody is going to miss the confusing temperature-gauge-style progress indicator on 1.0, but the toggle will take some getting used to before it feels natural. (A touchscreen wouldn't work, Bezos said, because it would diminish readability too much.)

Again, Kindle 1.0 took a little time before it started to feel booklike. It's undoubtedly an improvement, but we'll have to see whether Amazon was able to make the device more stylish, powerful, simple and usable all at the same time.

NEW YORK -- Amazon.com's giving a nice bonus to all the people who are still waiting to receive Kindles they ordered earlier.

Those people will get a free upgrade to the Kindle 2.0, Amazon representatives said today.

Chief Executive Jeff Bezos said they were taken aback by the sellouts of Kindle 1.0 and have taken steps to increase production of 2.0 and avoid long periods of unavailability,

For those waiting since the holidays for the Kindles they ordered, it will still be a few more weeks: The Kindle 2.0 will start shipping on Feb. 24.

NEW YORK -- Ending months of speculation about Amazon.com's electronic book project, Chief Executive Jeff Bezos just presented the Kindle 2.0 at an event at the Morgan Library in New York.

Amazon began taking orders for the $359 device this morning and plans to begin shipping them Feb. 24. Owners of Kindle 1.0 are getting front-of-the-line privileges if they order a new one within the next day.

Kindle 2.0 has the same industrial design that circulated in pictures on the Web a few months ago, with smaller buttons and curved corners that do away with the first version's unusual angular design:

Unlike the all plastic first model, the new one also has a brushed metal back similar to the iPhone. It also continues to have a 6-inch grayscale display, though the 2.0 adds richer grays.

The surprises were in new features added to the system and details of the hardware. They include:

-- A five-way navigational control on the right side.

-- Lighter weight -- 10.2 ounces -- and longer battery life.

-- Thinner construction: It's 0.36 inches thick, compared to the 0.48 inch thick iPhone. (Bezos didn't mention Apple's device by name, but showed a picture for comparison).

-- A nifty text-to-speech converter that "reads" to you.

-- Battery life is 25 percent longer than Kindle 1.0; Bezos said the device runs two weeks on a single charge.

-- Still included with the device is free wireless access, using 3G cell networks, over which a novel can be downloaded in less than a minute.

-- Storage is seven times greater than the first version, enabling Kindle 2.0 to hold 1,500 books. Internal storage totals 2 gigabytes; 1.7 gigs are available to the user.

Amazon's goal with the design wasn't to create a snazzy gadget as much as a device that would add digital conveniences to reading without distracting the reader.

"The Kindle is designed to disappear so you can enter the author's world,'' Bezos said.

Amazon has 230,000 books available in Kindle format but that's just the start, he said.:

"Our vision is every book ever printed in every language, all available in less than 60 seconds," he said.

Adding some star power to the event was author Stephen King, who was invited by Amazon to participate in the launch. King wrote an exclusive story for the device. Called "Ur," it's about a boy whose Kindle has fantastic powers.

Here are a few comparisons between Kindle 1.0, which launched in November 2007, and Kindle 2.0:

-- Kindle 2.0 has 16 levels of gray scale in its display, vs. four levels in 1.0.
-- Kindle 2.0 uses the 5-way input, versus the scroll wheel in 1.0
-- Kindle 2.0 is slightly taller -- 8 inches vs. 7.5 inches" with Kindle 1.0.
-- Kindle 2.0 weighs 0.1 ounce less than than Kindle 1.0, which was twice as thick -- 0.7 inches.

Here's an image from Amazon's Kindle page. I'll post others later today:

In case you missed Iamsaintnick.com, the fun Christmas gift referral service started by two laid-off Seattle techies - they're back with a Valentine's version launching today.

It looks like Amazon.com's finally going to release the second version of its Kindle electronic book.

Why else would the company be holding a big press conference with Chief Executive Jeff Bezos at the Morgan Library & Museum in New York on Feb. 9?

"We're not saying," spokesman Andrew Herdener said.

Maybe they'll say during Amazon.com's earnings call on Thursday.

The gadget has a fan base on Wall Street, where some analysts seem to have visions of the next iPod, so perhaps the release could offset a potentially chilly holiday earnings report.

Amazon has said its holiday sales were strong, despite an overall drop in Web retail during the season, but we'll see how expensive it was for the company to keep the boxes flowing with low prices and shipping deals.

So far word of the apparent Kindle launch hasn't helped AMZN stock much - it's down about 3 percent to $48.19 at last check.

I wonder how the company handle the transition from Kindle 1.0 to 2.0.

The first edition's still being sold at Amazon.com but it's sold out, with shipments expected in four to six weeks - after the Feb. 9 event.

Maybe they're just announcing the accessory light, although it sounds much higher profile.

Here's Jeff Bezos during the Nov. 19, 2007, press conference where he introduced Kindle 1.0:

(AP Photo/Mark Lennihan)

The holiday retail season is just revving up, but comScore's early read isn't promising.

After analyzing the first 23 days of the November-December retail season - which apparently begins Nov. 1 - the research firm found an "unprecedented" 4 percent decline in spending versus the same period last year.

Total e-commerce sales so far this month, according to comScore (which excludes auto, travel and corporate spending), were $8.2 billion.

Gian Fulgoni, comScore's chairman, said there are "dark clouds" hanging over consumers' heads this holiday season despite the reprive from lower gas prices. From its holiday sales update today:

"With consumer confidence low and disposable income tight, the first weeks of November have been very disappointing, with online retail spending declining versus year ago. It's also likely that some budget-conscious consumers are planning to wait to buy until later in the season to take advantage of retailers' even more aggressive discounting."

I wonder if consumers are also spending less online - and more offline - because going to the stores and shopping centers is a form of entertainment for people spending less on movies and travel. (As long as the shopping centers don't feel like real-life police dramas ...)

The winner of Amazon.com's second annual startup challenge, highlighting promising companies using its Amazon Web Services:

Yieldex, a service that helps online publishers do "accurate forecasting of overlapping online advertising inventory and optimal campaign allocation." The company's engineering office is in Boulder, Colo., and its sales office is in New York.

The company is trying to help large publishers (sites getting 1 billion to 10 billion impressions per month, such as CNN or the New York Times) get more sales from premium inventory attracting $10 to $30 CPM using its "proprietary yield index."

It's a nice enterprise showcase for the capabilities of Amazon: A single customer may send 20 gigabytes of data nightly for analysis, yet Yieldex uses one part-time system engineer to manage its services running on AWS.

Chief Executive Tom Shields -- who previously co-founded NetGravity, a company sold to DoubeClick in 1999 for more than $500 million -- said the cloud services gave Yieldex flexibility and scale on tap.

"We had no idea when we started this thing what kind of capacity we were going to need,'' he said.

The winner was announced tonight at an event at Bell Harbor after a year of Amazon traveling all over the place, pitching its Web services to developers.

Seven finalists were flown to Seattle to present their companies to a group of venture capitalists and Amazon managers who made the choice.

The prize is $50,000 cash and $50,000 worth of Amazon services.

Other finalists were:

Encoding.com, which "has transformed video encoding from a traditional software model to a software as a service (SaaS) platform," using Amazon elastic computing services. Chief Executive Greg Heil said that while YouTube has figured out encoding, but it continues to be a huge infrastructure challenge for second and third tier video sites.

When serving clients, Encoding activates Amazon server instances to handle their needs.

(Maybe Amazon will buy the company or add its own encoding service to its new content delivery service?)

Knewton, an educational content service with a "self-optimizing 'Darwinian' engine" that evolves as new students join its network and increase its dataset.

MedCommons, which provides "cloud-based Health 2.0 application services for patients and doctors, and enables third parties to customize and extend the MedCommons Platform for their own needs." It's a Boston-area competitor to Microsoft's HealthVault and Google Health that uses Amazon to store personal health record repositories.

Sonian, a "cloud compute e-mail productivity service" that archives and indexes electronic communications, files and unstructured content. After eight months in business it has more than 50 customers -- companies with 300 to 6,000 employees -- and white-label deals with vendors reselling its service.

Pixily, "an interactive document management service that organizes paper and electronic materials online." It's aiming to help consumers reduce paper clutter and better manage information, and provide businesses "an affordable on-demand document management service." The company scans receipts and other records for customers, who can then search them with a Googlesque search window at its Web site. Customers can scan documents themselves or take pictures of materials and e-mail them to Pixily, or send batches of documents to the company in prepaid envelopes.

Zephyr, which offers management tools for enterprise test departments. It aims to lower costs and increase productivity "with real-time visibility into all aspects of their software quality cycle." Founder Samir Shah said customers such as Accenture, Infosys and Cap Gemini are using its Amazon-powered services to provide service to their customers. He's a fan of Amazon's pay-as-you go computing.

"I love being nickel and dimed here -- it's really great," he said.

Last year's winner was a video ad service company called Ooyala, which was started by ex-Google employees. A few months after the Amazon.com award, it raised $8.5 million in its second round of funding.

Talk about a big thank you: Amazon.com just spent about $4 million buying one of seven handmade copies of J.K. Rowling's "The Tales of Beedle the Bard" at a London auction.

Rowling auctioned the book of "wizarding fairy tales" that she mentioned in "Harry Potter and the Deathly Hallows" to support The Children's Voice, a charitable campaign for institutionalized children.

Amazon's "incredibly excited" about the deal and has put a prominent link at the center of its homepage, directing visitors to scans of the book.

Here's Amazon's description of the book -- which it isn't selling:

"The Tales of Beedle the Bard is extensively illustrated and handwritten by the bard herself -- all 157 pages of it. It's bound in brown Moroccan leather and embellished with five hand-chased hallmarked sterling silver ornaments and mounted moonstones.

The company's adding reviews and more images right now.

When it's all scanned, perhaps it'll be put on public display somewhere in Seattle, like the Seattle Art Museum?

Just in time for the credit crunch, Amazon's investing in Bill Me Later, a payment service specializing in same-as-cash, deferred payment deals.

It seems like a response to eBay's PayPal and Google Checkout, but I think that's not exactly what's going on. Those services simplify checkout and create billing relationships with customers, which Amazon already does pretty well.

The partnership with Bill Me Later gives Amazon the ability to go further and offer deferred payments, such as 90 days or six months with no payments.

That sounds a little simple, but it's important for Amazon as the financial crisis tightens the screws on credit happy consumers.

If consumers start using credit cards less because they're suffering from higher mortgage rates, fuel prices and general inflation, they'll shop less at online merchants.

Bill Me Later may help fill the void. It's another way to keep the spending going with short-term credit and simplified online purchasing.

For card-wary consumers, it seems like a smaller commitment and a better deal. (It is, if you pay it off in time -- otherwise it starts charging high interest just like a credit card.)

The partnership also gives Amazon a way to offer financing deals similar to those offered by offline merchants, and it gives consumers living paycheck-to-paycheck another way to buy things they really can't afford.

The Mountain View video content management service started by three ex Googlers won the first Amazon Web Service challenge that concluded at a dinner event tonight at the Seattle W Hotel.

Ooyala also has another local connection. Co-founder Sean Knapp, who previously was a UI designer at Google and developer of iGoogle, is from Gig Harbor.

Ooyala and six other finalists endured a daylong series of presentations, first at Amazon HQ on Beacon Hill and then at the hotel with a passel of venture capitalists.

As the winner, it gets $50,000 in cash, $50,000 in Amazon Web Services credits and seed funding - in an amount to be determined - from Amazon.

Best of all, the winners received a gold-painted sledgehammer signed by Jeff Bezos and presented by AWS Senior Vice President Andy Jassy, who told them they "can take a hammer to your servers because you no longer need them using Amazon Web Services."

Then the three founders donned safety goggles and took turns whacking an old server that Jassy set on the dias.

Ooyala was one of the most polished companies and also the most secretive - it was the only finalist that insisted reporters not be allowed to listen to its presentation.

That may be because the company hasn't yet announced its second round of funding. It sounds like its getting around $7.6 million, following its initial $1.5 million. Plus whatever Amazon puts in.

Since they don't really need the $50k, maybe they'll share some with their former intern, Maneesh Sethi, who suggested three months ago that the company participate in the Amazon contest. Sethi's already back at Stanford, co-founder Belsasar Lepe said.

My early guess on the winner was off a bit - you really can't judge a book by the cover. In particular, I was too quick to write off the SEO and insurance companies which both seemed to fare well and turned out to have pretty interesting technologies.

Commerce360 is working with a math professor who earlier worked on Yahoo's search algorithms and Milemeter has submitted something like 50 patents for its pay-by-mile auto insurance concept.

Milemeter President Chris Gay told me the competition was a great opportunity and winning would be worth "millions," factoring in the Amazon investment and credibility it would bring to his company. He was also glad for the chance to pitch to the assembled venture capitalists, even though some of them were familiar.

"Ironically, more than half have already turned me down,'' he said.

Amazon.com is hosting a shindig tonight at the W Hotel in Seattle where it will choose the best startup using its Web services.

Candidates were winnowed down to the seven that are presenting to a panel of judges this afternoon. A winner will be announced tonight and receive $50,000 cash, $50,000 in Amazon Web Services credits and the offer of an investment from Amazon.

Here are the finalists:

-- Brainscape is a free and open-source "database for resting state functional connectivity studies" developed by the Neuroinformatics Research Group at Washington University in St. Louis.

-- Commerce360 is a search-engine optimization company based outside of Philadelphia. Its key technology is "ClickEquations" software for optimizing search campaigns; clients include Comcast and The Franklin Mint.

-- Justin.tv is a live-video portal based in San Francisco but run by a group of former Seattlelites -- founder Justin Kan and pals Michael Seibel and Emmett Shear.

-- MileMeter is a Dallas auto insurance company preparing to offer insurance "buy the mile," selling miles in advance "so people who drive less pay less for insurance."

-- Ooyala is a high-definition Web video delivery and advertising platform started by a group of ex-Googlers, based in Mountain View, Calif., of course.

-- UserTesting.com offers inexpensive ($19) online usability testing of Web sites. It's also based in Mountain View.

-- WeoGeo is a Florida company building "a one-stop marketplace for mapping," giving surveyors, engineers, cartographers and scientists a place to store, search, exchange and sell map products.

I haven't heard their pitches yet, but here's my early, shoot-from-the-hip take.

Web video is getting crowded, but Justin.tv has hometown sympathy, the groovy factor and reaches the hot demographic. Ooyala has huge ambitions, polish and the Valley buzz factor, especially since everyone's been wanting to see what sort of companies rich ex-Googlers will start (do they even need the $100K?).

Brainscape is fascinating but it's not going to be as widely used as the others and won't use as many AWS services -- would you like an MP3 with that scientific paper? I wonder if Amazon will give a break to scientific/public interest projects built with its services.

Commerce360 may be the stuff, but SEO is getting crowded, it's nichey and the company seems a bit regional.

MileMeter is clever but is it a gimmick or a revolution? I can't imagine an insurance company would be able to replace traditional risk factors with mileage. I also wonder if consumers are ready to start buying auto insurance in blocks of time, like phone card minutes; the ones who want sporadic, bargain coverage may not be best customers for an insurance company.

UserTesting.com is a great idea. I wonder if it will be acquired (or imitated) and offered as a feature by a hosting service. OfficeLive, perhaps? But it probably won't showcase the huge scaling capabilities of AWS.

WeoGeo's the real standout to me, given the intense interest in location-based services and their underlying GIS technology. It also has really slick tools for searching and shopping that may catch the eye of Amazon executives doing the judging.

We'll see who wins in a few hours.

I used to write about Microsoft employees who got so excited about the tools they were developing that they quit to build companies around them.

That's what happened with Mikhail Seregine at Amazon.com, where he helped develop Web services the company provides to software developers and startups.

One project he worked on from inception to launch was Mechanical Turk, a service that helps companies hire people willing to do various jobs that can be done online.

Seregine left to start ClayValet, a company that claims to simplify online shopping by "having someone else shop for them." The 2002 Stanford computer science graduate started building the service in January, received funding from undisclosed angel investors and launched on Friday, just in time for the holiday shopping frenzy.

ClayValet asks visitors to describe what they are looking for, then its "shoppers" analyze customer reviews, prices and other information then send them a report within 24 hours.

The site provides up to five free reports per week and its performance charts say 90 percent of the queries are answered in less than 13 hours.

I asked a little while ago for ClayValet to find me a Nintendo Wii for under $300 and haven't heard back yet. I'll post an update when I get a response.

ClayValet has four employees at its offices on Capitol Hill. They're supplemented with services provided by Mechanical Turk, and the company also uses Amazon's hosted storage and processing services.

Seregine also followed Amazon's quirky naming practice. When I asked spokeswoman Darcy Camden about the name she said it's "a name that encourages questions. It is also a literary reference to the Golem, a servant sculpted from clay who follows written instructions."

I guess that makes about as much sense as Mechanical Turk.

UPDATE: It was fast, for me at least. The report came back in just about an hour. Unsurprisingly, it couldn't find a reasonably priced Wii. It recommended that I buy the system from PriceGrabber.com for $364.89, including shipping, and provided some Cnet reviews and a summary of customer opinions.

It's kind of fun and might be useful for complicated product searches that don't work well with automated comparison shopping services.

I wonder how broadly ClayValet will go beyond Amazon, which seems to appear frequently in its results. If it mostly points people to Amazon, they may opt to just search the site themselves. I also wonder if it will ever direct users to sites that don't have a lower price yet don't offer referral commissions.

But I'm curious to watch the experiment and see whether consumers are willing to wait a bit longer for really detailed, human-processed results to their queries.

I'm fascinated by Amazon.com's new Kindle electronic reading device, but I've got more questions than answers - even after interviewing Charlie Tritschler, director of Kindle.

Tritschler was one of the product specialists that Amazon started recruiting in late 2004 from companies such as Apple, Palm, Philips, Sony, RIM and Microsoft.

In early 2005 it hired Tritschler from PalmSource. Before that he was at Liberate Technologies and Apple, where he spent 10 years and worked on the PowerBook line.

Tritschler answered some questions about Kindle today in an interview from New York (where Amazon held a press event but didn't invite its hometown paper, one of 11 available on the Kindle, and recently ranking #42 in the Kindle Store).

He wouldn't say exactly how many people are working on the project, which buildings it emanated from in Seattle (turns out they were also developed in Cupertino, Calif.) or how they camoflauged Kindles when testing them here in town. Nor would he discuss future directions or details of the internal hardware.

On other topics, though, he provided some interesting details.

Is Kindle hackable? "It's not something we're opening up, but all devices can be hacked. That's something people can do."

Will there be APIs for software developers to write Kindle applications? "That's an important future direction for us."

Tritschler noted that Amazon also announced a "digital text platform" for authors to create content for Kindle.

Will this also be used as a music player? Kindle supports MP3, has headphone jacks and "the sound quality is really nice." Amazon will see what users want from Kindle, but "we really designed it to be a single purpose device" for reading.

How about a color display? Sounds likely. He noted that screen producers "have been showing some color prototypes."

How about video playback, once Kindle has color? "As the technology evolves to support faster refresh rates, that's something the market will look for."

Does it have a browser? Yes, in the "experimental" features area. But it doesn't work well with sites that are "heavily formatted." "Things that are text-based work very well,'' he said. (I wonder how it will work with free content formatted for mobile devices.)

How did Amazon recruit him? By asking him to come "change the world."

Tritschler believes Kindle will indeed change the world by improving the experience of reading, adding capabilities such as search and a built-in Oxford dictionary that can be used to check definitions of words as you read.

I've seen a lot of similar reading technologies over the years, from companies such as Microsoft and Sony, so it seems to me that while the device may be better than predecessors, Kindle's real advances are in its business model.

When Jeff Bezos refers to Kindle as the iPod of reading in the glowing Newsweek story where Amazon chose to debut the product, he's referring not just to a device for playing digital content but an iPod-like ecosystem with a device, service, store and content partnerships.

For one thing, it comes bundled with free wireless service and its own unique e-mail address. There are no monthly fees to pay and renew with wireless providers, you just turn it on and connect, just like a radio or a TV. Amazon covers the service cost with Kindle's price and content sales, although it must have been able to get a deal on wireless service because the device uses minimal bandwidth.

Novels in the Kindle format are typically 500 to 800 kilobytes, Tritschler said, explaining why they download in 10 to 15 seconds.

Can Amazon provide this free service forever, especially on future versions with color screens and video that use more bandwidth? Has it figured out a way to wrap bandwidth and access costs into the content? If so, why can't we get phones, computers or Tivos like this?

Amazon has made deals with book publishers and it's now selling digital "Kindle editions" of 90,000-plus books, but digital books have been around for awhile.

More intriguing (from my perspective) are the deals it forged with periodical publishers. It offered newspapers, magazines, blogs and wire services a new opportunity to sell digital subscriptions. Even though you can already get their content online, usually for free and in full color, they're hoping that people will pay for the convenience of their content arriving on Kindles.

If this works, and content owners find people are still willing to pay for their content in a useful format, maybe it will be the beginning of the end of the current Google era where publishers are encouraged to give it all away and hope for traffic and ads.

Speaking of giving it away, I wonder if Amazon will ever make Kindle work with digital books already available from public libraries.

The public buys those books, so it should be able to read them in the latest format without buying another copy from Amazon. Nor should libraries have to go out and buy "Kindle editions" of their collections.

Maybe I don't have all the details, but it seems that for Kindle to become the iPod of books, Amazon will have to let people put free content on the device. Can it do that and sustain the free services? Will people really pay $399 for a device that won't let them load content they already own or acquire content from sources other than Amazon?

Remember that less than 3 percent of the content on the average iPod was purchased from iTunes, according to Steve Jobs, who argued that a big reason for the iPod's success was the system's openness.

The openness of iPod and iTunes is pretty debatable, but for digital content consumers, it set the expectations of flexibility.

If Kindle doesn't have similar flexibility, and digital reading devices really are the books of tomorrow, maybe someone will have to come up with a gateless, open-source/public access version.

UPDATE: A reader pointed out that the Kindle was developed at Lab 126, an Amazon subsidiary developing gadgets in Cupertino, Calif. Details about Lab 126 are now posted at its Web site, including a mission statement that suggests Kindle is the first of multiple reading devices from the company. It's vision statement:

We envision wireless electronic reading devices that embrace a traditional book's simplicity, utility, and the ability to disappear as we read, but offer consumers capabilities that are only possible through digital technology and wireless connectivity. Starting with Kindle, which enables consumers to think of a book, newspaper or blog and be reading it in less than a minute, we will build tightly integrated products that bring together great devices, powerful software, Amazon services, and unmatched content selection.

UPDATE 2: I caught up with Steve Kessel, senior vice president of worldwide digital media at Amazon, who oversees the product and Lab 126. He said Amazon has teams around the world working on its design, software and interface.

When I asked if people will be able to load their own content, he noted you can email personal documents such as Word documents and jpeg images to Kindles. It also accepts PDF documents as part of the experimental section, although "some have fixed layout so they may not layout perfectly on the device."

Can people load their own books onto Kindle? "Books are purchased from the Kindle store."

But you can load your own music onto an iPod, I said.

"All the books for purchasing are from the Amazon store because to create this seamless experience of being able to download over the air, it would have to be built as an end-to-end experience."

Kessel left the door open a crack, though:

"I think we're open to different ideas in the future.''

I need to pay more attention to the blog of Erik Selberg, who left Microsoft's search team in September to join Amazon.com.

On Tuesday, Selberg wrote about how a friend on Microsoft's search team was escorted out of the building after deciding to join Google's Kirkland office. That led him to question why he received better treatment:

Other colleagues I knew from Microsoft that went to Google were shown the same treatment. So why was I shown the love and not my friend? Well, as near as I can tell, Microsoft doesn't want someone who has decided to leave for Google around so that other employees can ask all the obvious questions and think about going to Google themselves. Google is clearly the competition, and while it's OK to leave Microsoft and do something random (like work for Amazon), leaving to compete with Microsoft is an unforgivable offense, apparently up there with violating company policies.

Last Friday, he shared a chat he had with Yahoo's international search boss about why the company opted to locate in Bellevue rather than Seattle, and how the local team with work with Yahoo's mothership:

Microsoft isn't moving anytime soon, and Google opened up an office in Kirkland, also on the east side. So why not offer something different, like a nicer commute or better digs? He didn't know.

The second question also got a non-answer. He wasn't sure who else was going to be up in Seattle, so apart from having an office with a bunch of Yahoo! engineers, it wasn't clear that there'd be any synergy with the other teams. Seems... well, broken to me. Hey Yahoo!, is this really what's happening?

Selberg's Friday post also reported that Craig Chambers left the UW computer science department to lead Google's infrastructure engineering team in Fremont.

Chambers spent a sabbatical with Google last year and has been working there since the end of the summer, according to Ed Lazowska.

Two weeks ago Chambers was joined by Brian Bershad, another CSE professor, further boosting the search company's UW connections.

Is this some sort of payback from Larry and Sergey, who hatched Google while studying at the Gates Computer Science Building at Stanford?

Until mid-year, Bershad was also chief executive of Illumita, a virtualization company founded by a group of UW profs.

Selberg -- also a UW alum -- noted that Amazon is another option for big-company software jobs in Seattle, and it's "located in the heart of the I-District with much better locale and food!"

I'm looking forward to reading what he'll say about South Lake Union.

That's what a blogger/activist said may happen, leading to some chatter.

This could be a seismic event, now that patent reform is on the front burner.

Amazon's one-click patent was the prime example of the patent system gone awry.

I asked an Amazon spokeswoman for its side of the story and whether it's going to fight this and haven't heard back yet.

So much for old-school balanced reporting, here's a link to the original post.

Update: Amazon did respond to Out-Law.com and said it believes the patent will be upheld on the review granted the blogger, Peter Calveley.

The main shortcoming of Amazon's S3 online storage service - a cornerstone of its hot Web services platform - was that it didn't guarantee uptime through a service level agreement (SLA).

Companies used to such agreements were wary of storing crucial files with Amazon, limiting its appeal. The company hopes that will change with a new SLA, retroactive to Oct. 1, that services evangelist Jeff Barr announced on the Amazon Web Services blog:

We know that many of our customers, including a multitude of teams within Amazon, are using S3 in mission-critical ways and need a formal commitment from us in order to make commitments to their own users and customers.

The company will "commit to 99.9% uptime" and customers can apply for a 25 percent credit on their monthly bill if uptime falls below 99 percent. They can apply for 10 percent credit if uptime is between 99 percent and 99.9 percent.

Barr's advice:

As is the norm with agreements like this, there's some fine print and you should definitely read it yourself to learn more.

I wonder if the service assurance, combined with the cost and ease of use, will attract bigger companies to the service.

(I'm also waiting to see if Amazon blends S3 with its MP3 store somehow, giving consumers the option to buy and store music in an S3 vault that's accessible anywhere - and now most anytime - with a Web connection. The company wouldn't say if that's in the works when I asked while reporting Monday's column.)

I'm not the only one on a fair use jag today.

Jeff Atwood's "Coding Horror" has a great piece today on You Tube: The Big Copyright Lie. It goes much deeper on fair use than I did in today's column on Amazon's new MP3 store.

Channeling Viacom boss Philippe Dauman, Atwood rips YouTube/Google for its hypocrisy:

What I don't understand is why YouTube continues to get away with the big copyright lie they've perpetuated from day one. They pay lip service to copyright, while building their business on an empire of unauthorized, copyrighted content. It's so brazen -- so blatant.

I wonder if music stores are doing the same thing by offering DRM-free music that they know is likely to be used in ways that violate its licensing rules. But it's different, because YouTube is giving stuff away while music stores are charging for content, making contracts and linking buyers to content.

It could get interesting if those links are used for enforcement, and not just to cover the backsides of distributors.

Could a record company figure out it if you were the one who bought the copy of a song that was copied a few times and ended up being distributed to millions of people online?

Some, but not all, of the songs sold at Amazon's MP3 store are traceable by music studios even though they don't have DRM software.

Instead, some have digital watermarks that identify their origin. This is what Pete Baltaxe, Amazon's director of digital music, told me when I asked about watermarking last week:

"Amazon does not apply any watermarking so in some cases the labels have asked, or are interested in providing files that would indicate that Amazon was the retailer."

It seemed like a sensitive subject to Baltaxe, who stressed that Amazon isn't doing this, but record labels are:

To be clear, we don't apply any watermarking ... In some cases labels can deliver us sound files that have a watermark that indicates Amazon is the retailer. Amazon doesn't apply any watermarking.

Still, Amazon's music store is a leap ahead in useability. It's so good, consumers probably won't care about watermarking or terms of service.

It could inspire other music vendors to follow suit. At least that's the advice of Yahoo Music's Ian Rogers, who helped build the company's music store around Microsoft's DRM technology.

Amazon's MP3 store got it right, he said in a presentation ("Convenience wins, hubris loses ...") that he made to other music business-types and then posted on his blog. An excerpt:

But now, eight years later, Amazon's finally done what was clearly the right solution in 1999. Music in the format that people actually want it in, with a Web-based experience that's simple and works with any device. I bought tracks from Amazon (Kevin Drew and No Age), downloaded them, sync'd them to my new iPod Nano, and had them playing in my home audio system (Control 4) in less than five minutes. PRAISE JESUS. It only took 8 years.

8 years. How much opportunity have we lost in those 8 years? How much naivety and hubris did we have when we said, "If we build it they will come"? What did we spend? And what did we gain? We certainly didn't gain mass user adoption or trust, two prerequisites to success on the Internet.

Amen*.

The megasite is changing its look and feel, adding more polish and toning down the bargain warehouse feel.

A new left-side navigation panel makes it easier to see and reach the different store categories. It also highlights just how broad the offerings have become.

But the site still screams deals! deals! deals!

It's a phased rollout, so not everyone's seeing the changes at first. Here's a screen grab: Download file.

Just days after a fallout with Apple, ending its iTunes distribution deal, NBC Universal announced today that its video content will instead be sold through Amazon.com.

NBC shows such as "The Office" and "Heroes" are now available through Amazon's Unbox download service, the companies announced today. Episodes of "30 Rock," for instance, are available for $1.99 and a full season costs $32.49.

Starting Sept. 10, they'll also provide free downloads of pilot episodes of NBC's new shows such as "Bionic Woman."

Universal movies have been distributed via Unbox for a year now, the companies noted in the release, so the TV content deal builds on an existing relationship.

NBC's quote in the release sounds like a dig at iTunes:

"With the addition of NBC Universal TV content to Amazon Unbox, fans now have the ultimate convenience for enjoying their favorite shows whenever or wherever they want," said Jean-Briac Perrette, president, NBC Universal Digital Distribution. "This further expands our longstanding relationship to bring a robust content offering to the marketplace in a variety of ways that will benefit the consumer and, at the same time, protects our content."

I wonder if Amazon is luring content owners from iTunes, or if content owners are just shopping around for a better deal.

Once again, the Seattle e-tailer gave consumers an early peek at the price and specs for a hot new product: The first Windows Home Server units, from Hewlett-Packard, will cost $599 for a 500 gigabyte version and $749 for a terabyte.

Computerworld has a write-up of the gaffe.

If Amazon has it right, the servers will be available Sept. 15, putting to rest recent speculaton about an Aug. 27 launch date.

Microsoft's Home Server team blog clarified the Aug. 27 reports but hasn't said anything yet about the Amazon slip.

Amazon CTO Werner Vogels and services evangelist Jeff Barr used their blogs to announce Amazon Flexible Payment Service, or FPS, this morning.

FPS, the latest addition to Amazon's Web services, lets site developers use Amazon's payment system to charge customers for using their services.

It's dubbed flexible because it allows a variety of payment methods -- credit cards, bank account transfers and Amazon Payments -- and charges different merchant/developer fees depending on which method a customer uses.

In a particularly clever move, FPS will use Amazon's authentication system. That means customers registered with Amazon will use the same login and payment information at other Web sites using FPS. Vogels put it this way:

This helps Amazon customers keep their payment information secure while exploring new services and its helps developers by removing the typical friction associated with making a first-time or repeat purchase.

This works both ways. Web services that register new customers will add to the list of Amazon registered customers. Amazon's authentication/payment system is a long way from becoming universal, but this could nudge it that direction.

FPS also puts Amazon into direct competition with Microsoft, Google and eBay, all of which are trying to propagate their own online registration and payment systems. I wish they'd all work together so you'd only have to use a single sign-on for everything, but that's a fantasy.

I wasn't the only one here who saw a challenge to Amazon.com's EC2 in Ray Ozzie's speech. One of the analysts just asked when Microsoft will start offering such a service.

Ozzie said he respects the Web services that Amazon is offering and appreciates how it has opened eyes to its potential. He basically confirmed Microsoft is going there, but he wouldn't say when.

"Directionally I think you could see in my presentation that we believe very heavily in this utility computing fabric,'' he said.

"Internally it's the only way we could get scale for the properties we run internally," he said. "It just makes sense to offer those services to developers and enterprises over time.''

Ray Ozzie's telling analysts how Microsoft will provide a virtual computing platform similar to Amazon.com's elastic computing cloud.

Utility computing is one of the major services to be powered by Microsoft datacenters, such as the one in Quincy and a new one being developed in San Antonio. It's part of a platform Microsoft is building to position itself as the blend of local and online computing evolves.

Amazon's service is especially popular with startups because it's cheaper for new companies to rent computing capacity than to set up and manage services. But Amazon's service doesn't promise service levels that big established companies expect.

At the other end of the spectrum are premier utility computing services offered by companies such as IBM and Sun. It sounds as though Microsoft is trying to appeal to both ends.

Ozzie didn't promise service levels, but implied they'd be there. He said Microsoft's utility computing services will appeal to enterprises as they increasingly get used to services.

"Big companies will find this useful especially for their customer facing systems in handling demand spikes,'' he said.

Microsoft hosting is one of three options Microsoft is offering businesses, Ozzie said. Companies can also choose on-premises servers, which offer more control and customization, or choose hosted services offered by partners with vertical expertise, he said.

Services hosted in Microsoft's datacenters "will likely be much more horizontal in nature and where we'll take a paltform approach to it and offer the lowest possible cost that we can.''

Ozzie so far hasn't offered specifics about price or timing but utility computing was described as part of a group of services the company will introduce in the next 12 to 18 months.

Jason Kilar, who launched Amazon.com's video business, will run the YouTube killer hatched by the old guard media companies.

NBC announced today that Kilar, 36, will be the Los Angeles-based venture's chief executive, reporting to NBC Universal President Jeff Zucker and News Corp. President Peter Chernin.

Chernin's quote in the release:

"Jason's product and consumer expertise in the world of e-commerce is arguably unrivaled in this business and gives him a great insight into what it takes to create a superior user interface. We already have access to world-class content and near ubiquitous distribution, and the next step is marrying it with the features and tools that will help define the ideal user experience for video content on the web. We think Jason is the ideal person to lead that effort."

From 1997 to 2006, Kilar rose to vice president and general manager of Amazon's North American media business that includes sales of books, music, video and DVDs. The release notes that Kilar "originally wrote the business plan for Amazon's entry into the video and DVD businesses."

NBC's release said the video service will debut later this year with "thousands of hours of full-length programming, movies and clips from myriad networks and two major film studios and with an unparalleled reach. With distribution partners AOL, CNET, Comcast, MSN, MySpace and Yahoo!, the new venture will have access to 98 percent of the monthly U.S. unique users on the Internet."

Jason Kilar.

Source: NBC Universal

Amazon.com's latest developer newsletter called out Pictogame, a French company using S3 storage to host its "user-generated" game widget.

I had to try it out and build my own game:

Put this game on your blog   Create your own   More games

Amazon.com evangelist (and former Microsoft manager) Jeff Barr posted an amusing story about being recruited by Google. It fell through when he failed a crucial test -- he couldn't remember his college grade point average:

Given that I earned my degree in 1985 and have been earning a living by writing code since I was 15 or 16, this didn't seem all that essential.

The story keeps going, though:

Funny thing is, I now have several more e-mails in my inbox from other Google recruiters. After reading these e-mails it appears that they don't know that I interviewed there last year! Perhaps they don't have this data in searchable form. Could that be?

Why is he announcing a hot new music store, but withholding juicy details?

I wonder if a bunch of other retailers are going to announce DRM-free music stores, and Amazon.com's getting ahead of the game, making sure people know that it's going to be a player.

The main unanswered questions about Amazon's music store are when it will launch and how much the songs will cost. It's a safe guess that the store will launch before the holiday retail season and the songs will cost the same or less than the $1.29 DRM-free tracks sold by Apple's iTunes store.

I'm also curious about the quality of the songs, since record companies may be more amenable to DRM-free downloads when they're in a compressed format that's of lower fidelity than a compact disc.

Amazon already provides some free music downloads as a promotional service to vendors and has a "free downloads" section at its music store. I downloaded a few songs as an experiment; one was compressed to 199 Kbps and another was 201 Kbps.

If that's the format for the upcoming store, Amazon may be upping the ante on quality as well as interoperability -- songs from iTunes are compressed further, to 128 Kbps, unless you pay an extra 30 cents apiece for "premium" 256 Kbps versions without DRM.

(Slate examined the premium bitrates last month, concluding it doesn't matter. I think CDs sound better so I'd rather buy discs and rip them myself.)

When I asked Amazon.com about the bitrates of the DRM-free downloads it will sell, I ended up on the phone with Bill Carr, vice president for digital media. The eight-year veteran is in charge of the new download business.

Carr didn't answer the question, but gave me some perspective on why Amazon is making this move.

He said DRM has been a big impediment to digital music sales because of interoperability problems it causes for consumers. Amazon has been talking to record companies for months, drawing on relationships that began when it launched its CD store in 1998, he said.

"We've been working within the record industry now for quite some time to help pave the way to a more customer-centric approach. That approach is to enable DRM-free music downloads, which we think will help drive customers toward legitimate forms of music downloads."

Details about bitrates won't be provided until the service launches:

"I wouldn't comment on the specific bitrate but rest assured that the product will be a high-quality product."

Carr said the store will have "an incredibly positive impact" in the music business. He wouldn't say whether he expects to leapfrog iTunes.

"We're one of the largest CD retailers not only in the U.S. but on a global basis. We're the only one that has had a growing business for several years in a row. ... We believe we can inject similar growth into this business by offering customers what they want."

I asked if Amazon had plans to sell a branded digital music player to complement the music store. He said there aren't plans for a device, and noted that Amazon sells other companies' digital music players at its electronics store.

The Seattle company's Web site is one of the "iconic objects of technology" discussed in the May-June edition of Technology Review.

Although the headline is "Objects of Desire," that doesn't quite mesh with the critique by Mark Rolston, vice president of creative at Frog Design. His take, from TR's nifty online slideshow:

"Amazon is iconic, but not necessarily good design," says Rolston. "A Jeep is iconic, but if you've ever ridden in a Jeep, it's crap. Amazon represents a basic approach to e-commerce. It's balanced cacophony: There's search, reviews, and comments swirling around these pages. With these tools, you almost serendipitously end up with a basket of things to buy. It's iconic because it nailed early on the basic approach of a vast catalogue."

I had a feeling I'd learn a lot from The Startup Project hosted by Amazon.com a few weeks ago in a funky loft on Capitol Hill. It was the first of several events the company is holding to introduce its services to developers and entrepreneurs.

The room had more startup buzz than a month of TechCrunch. Everywhere I turned there was somebody starting a cool new company, way more than I could include in today's column.

I ended up sitting next to Josh Juster, who had left Microsoft to start a new company three days earlier. Juster, who worked on Zune and MSN, said the company is tentatively called Nightify and will be like "evite meets CitySearch."

They weren't all using Amazon Web Services, but it sounds like they'll have to consider them if they're seeking venture funding. Apparently, VCs are becoming major evangelists for services like S3 storage and Elastic Computing on-demand processing, since they can dramatically cut the cost of launching a Web business.

Andrew Jassy told me VCs around the country have contacted Amazon, asking to be involved in startup projects in their cities. They haven't announced plans yet, but Silicon Valley, Boston and Austin, Texas, are likely locales.

One thing I'm still curious about is how AWS will affect Microsoft. Short-term, Microsoft has to be thinking about more hosted developer services to counter what AWS is offering to Web developers and startups.

I also wonder how much AWS and the like will affect Windows Server sales. Microsoft's selling point is lower cost. It managed to defend that position against Linux with the TCO arguments, but AWS seems to undercut them even further, trimming out the cost of open-source computing with EC2.

Could Microsoft offer an Elastic Longhorn Computing Cloud, or would that be too offensive to Dell and other server manufacturers?

I'm also curious to see whether Google responds with hosted services. That seems like a natural thing for it to announce later this month when it starts holding Google Developer Days conferences.

Also likely to be affected by AWS are traditional outsourcing firms. A few years ago I visited Wipro's headquarters in Bangalore and saw the room where it remotely manages datacenters for companies like GE.

That's the same concept, I think, but Amazon's trying to make outsourced infrastructure simple and self-service so it makes sense for smaller companies.

Another day, I'll have to explore whether we're going back to timeshare computing.

Split adjusted, that is.

Henry Blodget probably helped make a lot of Amazonians in Seattle rich, if they sold after his upbeat forecast goosed the stock in the late 1990s.

Blodget bought himself Amazon.com stock at $50, as it headed down in 2000, and he's just now breaking even.

From the fallen analyst's blog today:

"Amazon hasn't become the company I hoped it would back when I put that $400 target on it ($67 in today's split) in December 1998. As you may recall, the stock blasted through the target in two weeks, soared to $600, and then, over the next 18 months, collapsed. Amazon's still a great franchise, and I'm still a happy customer. I don't own the stock because I expect it to soar. I own it because ... well, for old times' sake and because I'm going to own it until it breaks through $400 ($67) again or goes bust, whichever comes first. I don't even follow the company that closely anymore (too depressing). But last night's quarter, and today's 25% pop, certainly come as a breath of fresh air."

The e-commerce giant will work with the National Federation of the Blind "to promote and improve technology that enables blind people to access and use the World Wide Web,'' they announced today.

Amazon will "continue improving the accessibility of its Web site platform" and the NFB will contribute expertise in Web accessibility, the release said.

I asked for more specifics and was told one aspect of the partnership involves "screen access software" that enables blind people to independently navigate the Web, access site aurally or through Braille displays and interact with sites using keyboard commands. The software relies on features that can be built into Web sites such as "alt-tags" describing images and keyboard command equivalents to mouse actions.

Amazon will make changes to its site by Dec. 31, but the agreement is in place for six years, said John G. Paré Jr, spokesman for Baltimore-based NFB.

Smartsheet.com, a Bellevue-based "Office 2.0" venture that provides online task management and spreadsheet services, launched version 2.0 yesterday with more features for users of the free version.

(I mentioned the company in a recent column on Google.)

The company also announced that its free online document management service is being powered by Amazon.com's S3 storage service.

Additionally, the company has plugged in Amazon's Mechanical Turk labor service, so Smartsheet.com customers can tap the Turks to build new business templates.

"We extended the document feature to all Smartsheet customers so that anyone, free or paying, may experience the speed and reliability of Amazon S3,'' Mark Mader, Smartsheet.com president, said in the release. "We've also expanded our use of Amazon Web Services to include Amazon Mechanical Turk. This is a great way for us to cost effectively tap into a diverse workforce for the identification of business and consumer content."

Maybe Amazon ought to buy Smartsheet and take the fight to Google Apps.

The volunteers searching for Jim Gray have completed more than 530,000 image-scanning tasks doled out by Amazon.com's Mechanical Turk service, according to Werner Vogels, the company's chief technology officer.

Volunteers pore over satellite images, searching for signs of Gray's boat.

"We need a little more of a push and then all the images will have been processed," Vogels said on his blog today. "A team of experts led by Alex Szalay of John Hopkins University has been working through the thousands of images marked for further investigation. They currently have a set of about 20 images that are being further scrutinized before they will be handed to Coast Guard for determining whether they can take action on them."

If you'd like to pitch in, details are at Mechanical Turk.

CNet posted a great interview with Sony boss Howard Stringer and CFO Rob Wiesenthal. Among the highlights:

-- Sony may add Wi-Fi to it's e-book digital reader to compete with a similar product that Amazon.com is preparing to release. Images of the Amazon "Kindle" device surfaced last year, based on an FCC filing. I checked for an update today and was told Amazon.com won't "comment on speculation or rumor."

-- TV and music download services are planned for the PlayStation 3, cementing its position as an entertainment hub as well as a cutting-edge game console. Wiesenthal, in a hard-to-read quote, said online services will help make the business profitable by the end of 2007.

We're very happy with what we've seen so far, and we're hoping in the future to have their own content television and music. There is a third revenue stream to help you achieve your economics.

-- The high-def DVD format war is raging on, despite new hardware shown at CES that will play both Blu-ray and HD-DVD discs. Howard remains convinced Blu-ray will prevail, thanks to the PS3.

The people who like Blu-ray are the people who play PlayStation 3, just as people who play PS2s were the early proponents of the DVD format. It drove the DVD format.

-- It will take up to three years for Blu-ray DVD players to fall in price to around $300.

-- Software is key. Stringer talked about how Sony's made software development a top priority, and said further improvements are still in the works.

There are a number of people in their 40s instead of their 50s and 60s. I don't mean to downplay age, but we are pushing Sony first past the digital world and, for example, now we have software architects in every product lineup. We didn't used to. I don't think everybody really knew what a software architect was two years ago. So now we have a relationship between software engineering and product design from the beginning of products.

-- Sony wants to bypass the PC and bring Web content straight to the TV. Stringer played up the Bravia IPTV device that Sony unveiled at CES.

Basically, we've made the television the center of the Internet world instead of the computer, by bypassing the computer and taking the Internet direct to that television screen. Now, there are a lot of implications for what that will do inside the television set. It's a sea change for Sony to be the first to do that because two years ago you were all muttering at us for being software-illiterate.

Here's part of a note Amazon sent to customers on its Wii waiting list today:

We will be limiting purchases to one per household and we anticipate that we will sell through our inventory very quickly as we've received 100 times more Wii email sign-ups than consoles we'll have available for sale (i.e., for every Nintendo Wii we'll have for sale, over 100 people have signed up to be notified).

What do customers ultimately buy after checking out the Sony PS3 listing at Amazon.com?

As of this afternoon, the site said 33 percent went on to buy an HD-DVD drive for the Xbox 360. Another 33 percent bought "The Legend of Zelda: Twilight Princess" for Nintendo's Wii, and the remaining 33 percent bought "Final Fantasy XII" for the PS2.

That was for the $499 core system. Of the people viewing the $599 premium system, half went on to buy the HD-DVD drive and half bought "Final Fantasy."

This time it's BusinessWeek's Nov. 13 issue, which looks at Amazon.com's Web services initiatives and that's getting a cool reception from investors.

At the very least, it's a better photo than this creepy cover shot.

It made investors happy, but it was a sad day for Seattle's tech community when Amazon.com yesterday said it would slow its investment in new technology.

Amazon's push into Web services, the creative things it's been trying and the smart people it's hiring have made it one of the most interesting companies in town from a tech perspective. But that didn't boost shares 12 percent.

I could see external RAID storage devices like the new one from Western Digital becoming an essential item in the digital home. Along with a fire extinguisher, first aid kit and a flashlight, we'll have a terabyte of storage stashed in a safe place.

RAID can let you run mirrored hard drives, so the data is safe if one of the drives crashes. But they're still delicate mechanical devices that will eventually fail. Amazon Chief Technology Officer Werner Vogel had this happen, and used the experience to pitch his company's S3 online storage service in a blog post today.

S3 may be safer, but the fees add up, especially if you move a lot of stuff back and forth. Pretty soon you could buy a couple of these instead.

Here's a video clip of him discussing the Simple Storage Solution at the MIT Technology Review's Emerging Technology Conference.

From today's edition of Merrill Lynch analyst Justin Post's bi-weekly report on Net stocks:

"Internet stocks we cover were down 7.7% over the two-week period ending 5/19, vs.the S&P 500 which was down 4.4%. Large cap Internet stocks -- AMZN, EBAY, GOOG and YHOO are down 26.2% YTD collectively, vs. the S&P 500 which is down 0.1%."

That's the impression left by Amazon.com CTO Werner Vogel in an interview published in ACM Queue's May edition that was flagged by Slashdot today.

"Developers are like artists; they produce their best work if they have the freedom to do so, but they need good tools,'' Vogel said, explaining the creative environment the company is trying to offer engineers.

The interviewer was Microsoft researcher and computing demigod Jim Gray, who apparently fared better with Vogel than Microsoft blogger Robert Scoble.

Q1: Sales up 20 percent to $2.28 billion. Net profit $51 million, including $26 million gain from accounting change; down from $78 million a year ago. Company said operating income took an $8 million hit from foreign exchange rates, contributing to 2 percent decline in operating income.

Q2 forecast: Sales expected to grow 16 percent to 24 percent. Operating income expected to fall between 69 percent and 36 percent, to $32 million to $67 million, after taking into account $38 million for stock-based compensation costs and amortization of intangible assets.

FY06 forecast: Net sales expected to be up 17 percent to 24 percent, or $9.95 billion to $10.5 billion. Operating income expected to range from a 10 percent decline to 20 percent growth, or $390 million to $520 million.