Reuters spoke to Amazon.com's Jeff Bezos at the launch of the Kindle 2.

He talked about device's price, Amazon's big picture for Kindle, international plans and cannabilization.

Reuters: Has Kindle been a big hit since its debut late in 2007?
Jeff Bezos: We had way more demand than we ever expected or even hoped for.
which meant that we were sold out during 2 holiday seasons. which is not a good idea - not the plan. we made more than we though we would need and we still sold out. so its a high quality problem in the sense that demand has been very very good.

Reuters: Popular yes, but aren't digital book sales still a fraction of physical book sales?
Bezos: In 14 months, for the 230,000 titles that we have Kindle additions, Kindle unit sales already represent more than 10 percent of Amazon's total sales in those 230,000 titles. We spent 14 years building our physical books business. And in just 14 months, this is already 10 percent. So we are all very surprised that it is being adopted so quickly.

Reuters: How many Kindle 1's were sold?
Bezos: We are going to stick to our policy of not sharing that.

Reuters: What is the long term goal? Is Kindle going be strictly for text or some kind of wonder gadget that competes with iPods and other multimedia devices?
Bezos: We are really focused on making the best purpose-built reading device...for books, magazines and newspapers, blogs. It does have a web browser, so you can surf the web wirelessly. (It has) A basic browser -- it doesn't do flash, for example. So that's not the focus of the device. That's not the emphasis of the device. The real focus is reading. Its a device for reading.

Reuters: It does play MP3's...
Bezos: But that's not the focus of the device.

Reuters: Who helps you make it?
Bezos: We don't share the underlying business economics of the device. We believe it can be a meaningful business for us, over time.

Reuters: An Amazon employee (at the event) said it was made in China.
Bezos: Yes. We design it. But we don't have our own factory.

Reuetrs: Any International plans?
Bezos: If you look at Amazon's business overall, half of it is outside of the United States. We have a lot of global customers. this a U.S. device. We are not ready announce anything today about a global device, but with that big international customer base, we obviously are thinking about it.

Reuters: Any fear of cannibalization?
Bezos: Our view on that is -- We sell kindle and kindle books. and we sell physical books. We are going to try as hard as we can to have the best physical book store in the world. And we are going to continue to pour energy into that, And we are going to work as hard as we can to make sure the Kindle is the best it can be. We are going to let customers choose how much of which one they do. You can imagine a different scenario where we would have the kind of business where we say 'we want to have x-percent to be electronic and x-percent to be physical.' We don't do any of that.

Reuters: Amazon sells everything from giant screen TVs to tiny memory cards. Are you interested in making other electronics hardware products?
Bezos: We are totally focused on reading . We have no plans or thought about making any other kids of devices. We are really focused on this.

Reuters: What about a partnership with Apple or another partner?
Bezos: I don't want to talk about a particular company but we are excited about making kindle interoperable with mobile devices. We announced Whisper Sync today. you can reader on your kindle and read on your phone and we keep track of your place. People are going to read on a multitude of devices. Kindle is the largest E-book store in the world and we want to make sure that if people want to read those books on a multitude of device that we are open and excited about that.

Reuters: People say $359 is expensive, and demand would be greater at, say, $99.
Bezos: We can't make this device less expensive. It has this sophisticated EV-DO wireless radio, has the most sophisticated electronic paper display, a very fast processor. (Also) in Q4, in the midst of the worst macro involvement in a long time, we way underestimated demand for Kindle 1 at $359. So even in the midge of the worst macro economic environment probably since the great depression, people were buying kindles. Its just not possible to make this device less expensive.
If we could make it cheaper we would. We can't make it cheaper.

Reuters: Washington - Any quick thoughts on the economic debate on stimulus?
Bezos: From Amazon's point of view, we will stay heads down, focused, doing the same thing we have been doing for 14 years, which is lowering the prices, increasing selection...speeding up delivery. We are not going to change the way we do business because of the macro environment.

(Photo: Reuters)

Resembling a larger, whiter, thinner, but not-as-sexy iPhone, the Kindle 2 got its high-profile launch on Monday by Amazon, the Seattle-based online retailer.
 
Analysts, media and gadget hounds filled New York’s Morgan Library to hear Chief Executive Jeff Bezos touting the slimmer, faster new version of the e-reader that at $359 is still hardly a steal.
    
The press conference even featured an appearance from horror author Stephen King, whose novella “Ur” — about a college instructor who orders a Kindle (no joke) to frightening consequences — is only available on the Kindle.
    
But despite the advance hoopla — read Reuters’ preview of the Kindle launch here — the blogosphere was surprisingly low-key about Monday’s unveiling — perhaps given leaked photos of the supposed device that could be seen on the Internet beginning last fall.
    
“Wow, even Amazon is jumping on the iPhone-killer bandwagon,” said one blog, http://www.boygeniusreport.com, adding that the new Kindle is 25 percent thinner than the iPhone. Gizmodo, calling its new design a success, wrote: “It looks like Amazon got a few clues from Apple and Braun’s design guidelines.” The www.Techcrunch.com blog summed it up even more succinctly: “It’s much less ugly.”
    
Bloggers praised its thinness, more storage, better battery life, better display and faster page turning, but some still griped at its price tag and design, with one blogger saying the new Kindle is “still not pretty.” 

“If I’m going to spend $370, why wouldn’t I buy an iPod Touch or a Netbook and get way more functionality,” asked one posting. Another referenced the ubiquitous debate in cyberspace over open devices: “Where is the universal open device that consumers really want? Limited consumers just so you can direct all sales through Amazon will not play out in the long run.”
 
For an interesting read on how Amazon is currently cornering an underserved market niche, but how competition from tablet PCs could be an issue in the future, read here.    
    
Few bloggers commented on the new “read-to-me” feature, which allows users to hear their content read by either a female or male voice — although one blog said it “should be fun.” That may steal away some sales of books on tape, but Kindle said the feature was still experimental.
    
Amazon won’t disclose how many advance orders for the Kindle 2 it expects — nor how many of the first version it sold. And still a mystery is whether or not the Kindle is cannibalizing sales from the company, whose highest margin business is physical book sales, according to Bernstein Research’s Jeffrey Lindsay.
 
Bezos said last month for every physical book an Amazon customer with a Kindle buys, he or she buys 1.6 to 1.7 Kindle books.

(Photo of Bezos/Reuters)

Amazon's newest Kindle is out -- We've got reporters on the scene, and we'll be back with more details shortly. In the meantime, here's a link to the device on Amazon.com and part of today's press release:

Amazon.com, Inc. today introduced Amazon Kindle 2, the new reading device that offers Kindle`s revolutionary wireless delivery of content in a new slim design with longer battery life, faster page turns, over seven times more storage, sharper images, and a new read-to-me feature. Kindle 2 is purpose-built for reading with a high-resolution 6-inch electronic paper display that looks and reads like real paper, which lets users read for hours without the eyestrain caused by reading on a backlit display. More than 230,000 books are now available in the Kindle Store, including 103 of 110 current New York Times Best Sellers and New Releases, which are typically $9.99. Top U.S. and international magazines and newspapers plus more than 1,200 different blogs are also available. Kindle 2 is available for pre-order starting today for $359 at http://amazon.com/kindle2 and will ship February 24.

Reuters and others are reporting that Amazon.com is expected to unveil a new version of the Kindle electronic reader on Monday.

While the Kindle is a tiny part of Amazon's web retail business, it gets a ton of buzz, and a new version has been much speculated about on the web.  The question is whether mainstream consumers are really ready to buy it, particularly in the current economic environment.

"We think Kindle will be an interesting product which the high-end consumers love, particularly investment bankers traveling in from Connecticut," Bernstein Research's Jeffrey Lindsay says in the Reuters story. "We don't think it will be a large penetration object any time soon."

To help with mainstreamers, the Wall Street Journal writes,  Amazon is also expected to say it has acquired a new work by best-selling novelist Stephen King that will be available exclusively, at least for a time, on Kindle.

"Many publishers have long feared that Amazon would persuade a major author to write for its Kindle on an exclusive basis. Although retailers such as Barnes & Noble Inc. have long published their own books, they have struggled to find distribution outside their own stores. But Amazon has already proven that it can sell as many Kindles as it can manufacture. Indeed, Amazon is working to overcome the supply problems that have plagued the device," says the Journal.

We won't know all the details until later today, so stay tuned. For now, engadget has what appear to be some early images of the new version.

Meanwhile, the New York Times has a piece today on Plastic Logic, which also makes an electronic book device. The article says that Plastic Logic will "announce partnership deals on Monday that it says will bring a number of major publications to its planned device."

Keep an eye on:

• Satellite mogul Charles Ergen made an unsolicited offer late last year to take control of Sirius XM Radio Inc and was rebuffed, according to people familiar with the situation to the Wall Street Journal (WSJ.com)
• Most media companies are cutting back on investments but Comcast's SportsNet is putting money into studio improvements and new programming and revamping its Web sites to bring in more national advertising dollars (NY Times)
• Former Led Zeppelin singer Robert Plant received a "whole lotta love" at the Grammy Awards Sunday, winning five prizes including album of the year for an acclaimed collaboration with bluegrass queen Alison Krauss (Reuters)

(Photo: Reuters)

We won't be tempted by puns. Or any sort of lame wordplay.  We'll play this straight. Seriously. Here goes: After all the bad publicity caused by a photo of Michael Phelps apparently taking a bong hit, Kellogg has decided to dump the superswimmer.

Okay, now that's out of the way. Here's the basics from Reuters:

The world's largest cereal maker said on Thursday it would not extend a contract with Phelps, who charmed audiences in Beijing last year with a record-breaking, eight-gold medal haul, saying the photo of the swimmer was inconsistent with its public image.

Phelps, estimated to make millions of dollars annually from marketing deals, issued an apology this week after a British newspaper published a photograph purportedly showing him smoking marijuana during a student party at the University of South Carolina in November.

The move doesn't come as a complete surprise. Marketers often get nervous about this sort of thing, especially when forking out big bucks in this economy. Phelps has other deals worth millions of dollars with brands including Speedo swimwear, Omega watches, Visa Inc, Subway sandwiches and Hilton Hotels. Phelps's agency, Octagon, said earlier this week that it had been in touch with his sponsors and that none had indicated any intention of backing out of their deals.

What changed? What's the deal with Kellogg? The difference? One marketing executive tells AdWeek that it's all about the kids.

Kevin Adler, founder of Engage Marketing, a sports-marketing firm in Chicago, said Kellogg’s decision comes as no surprise. While others may not have gone public in their stance towards Phelps, it’s imperative that Kellogg do so because after all, the cereal maker is heavily perceived (as) a kids’ brand, he said.

“Athletes are brands. That’s the most important umbrella concept we have to understand is if you do something that runs contrary to your brand image, it will affect your ability to monetize that brand image. It really kind of is that simple,” said Adler.

Over at Gawker, they had a slightly different take.

Kellogg, in the most boneheaded move in the entire history of all celebrity endorsements ever, is dumping Michael Phelps over his pot photo. Has any brand ever been more out of touch with its customers?... Hello? This is the best possible recommendation one can make for breakfast cereal, the favored foodstuff of THC-induced munchies victims everywhere."

Ahhh, advertising.

Keep an eye on:

• Bruce Springsteen in none to happy with the notion of a Ticketmaster-Live Nation merger (Bruce Springsteen)
• U.S. magazine empire Conde Nast has replaced the publisher of The New Yorker, as the number of ad pages tumbled during the past year (Reuters)
• Rockers, rappers and record executives gather in Los Angeles on Sunday for the annual Grammy Awards, but there is little to celebrate at the music industry's biggest night (Reuters)

(Photo: Reuters)

Yes, it's true. Mattel has gone where it has already gone before, but only differently!

Pictures of Mattel's new Star Trek Barbies were released on Wednesday causing a stir among Trekkies, eagerly anticipating Paramount's May release of the film, "Star Trek," chronicling the earliest days of Captain Kirk and Spock.

The toys' images, released by CBS Consumer Products, which owns the licensing rights for Star Trek consumer products, show the three dolls, which are modeled after the three actors playing Captain Kirk, Spock, and Lieutenant Uhura in the film, which is set to be released in theatres on May 8th!

The dolls will hit shelves in April, over a decade after Mattel released a Barbie and Ken Star Trek themed collectible set in 1996 to celebrate the 30th anniversary of the cult hit TV show. Unlike the new line made to resemble the actors, the 1996 set features Barbie and Ken themselves dressed as original series characters.

Mattel also released a Barbie and Ken Star Trek watch in 1996.

Neiman Marcus chief Burt Tansky had some choice words for retail reporters last night, saying they had unfairly influenced the outcome of the 2008 holiday shopping season well before it even started. He was referring to stories that came out as early as September, like this one, predicting that holiday sales could be the worst in up to two decades because of the bad economy.

“I think the media have done us a terrible disservice,” Tansky said at an evening event sponsored by Financo Inc during the annual National Retail Federation conference in New York, attended by our own Karen Jacobs. “The media, I think, should start thinking about the impact they are having on retail.”
    
Many of these media stories were based on predictions from leading research groups, such as Deloitte, who gave gloomy forecasts due to the global financial crisis, the U.S. housing slump and credit crunch. 
    
And when retail chains finally began to take down the tinsel after the holidays, their performance proved even worse than that, with sales dropping for the first time in the nearly 40 years they have been tracked.
    
We didn’t know it last night, but Tansky may have had other reasons to be piqued than our role in bringing the bad news. Neiman today said it would start making interest payments on some of its senior notes by issuing more debt, rather than using cash, and planned to fire 3 percent of its workforce.
    
The news comes barely a week after Neiman posted a 31.2 percent drop in same-store sales at its unit that is home to the Neiman Marcus and Bergdorf Goodman stores.

(Photo of a Neiman Marcus gift book from a Christmas past: Reuters)

If ever you needed a reason to clear the dead wood from your Facebook posse, here it is: Burger King will give you a free Whopper hamburger every time you cut 10 of your “fair-weather web friends.”

But beware. While Facebook lets you anonymously eliminate your “friends,” the Burger King application notifies them when you “sacrifice” them in your quest for free fast food.

The Whopper Sacrifice ad campaign, spotted by Adweek, sends a message alerting your former friend that the sentiment you carry for him or her is nothing compared with the sizzle of a Whopper.

According to the Whopper Sacrifice web site, more than 12,000 friends have been bitten the dust — all for a (roughly) $2 Whopper.

In an economy like this, is anyone safe?

(Photo/Reuters)

Worried about the safety of your personal information? On second thought, maybe you’re not — if you shop with your American Express card, surf eBay or use an IBM system.
 
Those three companies are consumers’ picks for the top most trusted when it comes to protecting their customers’ privacy, according to a survey by TRUSTe, a consumer privacy protection organization, and the Ponemon Institute, an independent research group. 
 
Consumers reported that identity theft is the No. 1 factor influencing their view of how companies handle privacy concerns, with only 45 percent of respondents saying they felt they had control over how their personal information was used or shared. That’s down from 56 percent two years ago.
    
The worries over data security are real — companies from discount retailer TJX Cos to Bank of New York Mellon Corp have had major data breaches compromising the personal information of millions of consumers.
    
The top ten list is rounded out by Amazon.com, Johnson & Johnson, the U.S. Postal Service (which shares the No. 6 spot with Hewlett Packard), Procter & Gamble, Apple, Nationwide, and Charles Schwab.
    
The survey, now in its fifth year, polled nearly 6,500 U.S. adults to determine their view of the most trustworthy companies and brands when it comes to protecting personal information.
    
Companies including Disney, AOL and Dell made it to the top 20 list, with Yahoo, FedEx, Facebook and Verizon joining that group for the first time since 2004, when the Ponemon Institute began conducting research on the topic. It was also the first time for Apple, at No 8.

Google, whose growing dominance of the search market has prompted questions over how it uses its data, found itself ousted from the Top 20 list this year, as were Countrywide and Bank of America.

Blockbuster got into the set-top box game right in time for the holiday season with a new digital media player that brings fewer but newer titles from the Web to TV six months after arch rival Netflix launched its $99 Roku set-top box. Netflix followed that launch with similar partnerships with Tivo, Samsung, LG Electronics and Microsoft.

And that's just the tip of the iceberg. While the number of people who watch movies or TV via the Web is still small, media and technology executives believe a host of new technologies will make Web to TV a mainstream staple. Vudu already sells a $299 set-top box that lets users download TV shows, while Microsoft's Xbox 360 and Sony's PS3 game consoles can also be used to download programming from the Web for TV viewing.

Apple of course is trying to take a bite of the market with its Apple TV device that lets viewers download shows from their computers onto their TVs.

This could save consumers a lot of money-- bypassing the need to pay hefty cable fees -- and a lot of time when you factor in all the hours spent watching commercials. These devices do require fast Web connections, but market researcher Gartner forecasts there will be 499 milion residential broadband subscribers globally by 2012, up from 323 million at the end of 2007.

Blockbuster said its MediaPoint set-top box, made by broadband device maker 2Wire, allows customers to download high-definition quality movies to their TVs via broadband lines for $1.99 apiece, after an initial $99 for the box and 25 films.

Consumers have 30 days to watch a film once it is downloaded to the set-top box, and must finish watching it within 24 hours of pushing the "play" button. The service, called Blockbuster OnDemand, can be ordered at http://www.blockbuster.com beginning on Tuesday.

Unlike Netflix's "Watch Instantly" feature, which streams movies to subscribers' TVs or personal computers, the Blockbuster on-demand service will be open to customers who do not subscribe to its DVD-by-mail service, Blockbuster Online. Blockbuster Chairman and Chief Executive Jim Keyes said the company's longtime emphasis on new releases draws different consumers than Netflix subscribers, who are directed by its Web site to older catalog titles.

The service is essentially a rebranding and expansion of Blockbuster's Movielink.com Web site, which offers about 10,000 on-demand movies for download to personal computers. About 2,000 of those titles, such as recent DVD releases "Forgetting Sarah Marshall", "Sisterhood of the Traveling Pants 2" and "Get Smart", can be downloaded to TVs via Blockbuster OnDemand, the company said.

Blockbuster's also looking into packaging the new service with Blu-Ray DVD players and is considering alliances with video game console makers, but is not ready to disclose the details.