Friday, October 21, 2011

Jobs questioned authority all his life, book says

A new biography portrays Steve Jobs as a skeptic all his life — giving up religion because he was troubled by starving children, calling executives who took over Apple "corrupt" and delaying cancer surgery in favor of cleansings and herbal medicine.

"Steve Jobs" by Walter Isaacson, to be published Monday, also says Jobs came up with the company's name while he was on a diet of fruits and vegetables, and as a teenager perfected staring at people without blinking.
The Associated Press purchased a copy of the book Thursday.

The book delves into Jobs' decision to delay surgery for nine months after learning in October 2003 that he had a neuroendocrine tumor — a relatively rare type of pancreatic cancer that normally grows more slowly and is therefore more treatable.

Instead, he tried a vegan diet, acupuncture, herbal remedies and other treatments he found online, and even consulted a psychic. He also was influenced by a doctor who ran a clinic that advised juice fasts, bowel cleansings and other unproven approaches, the book says, before finally having surgery in July 2004.
Isaacson, quoting Jobs, writes in the book: "'I really didn't want them to open up my body, so I tried to see if a few other things would work,' he told me years later with a hint of regret."
Jobs died Oct. 5, at age 56, after a battle with cancer.

The book also provides insight into the unraveling of Jobs' relationship with Eric Schmidt, the former CEO of Google and an Apple board member from 2006 to 2009. Schmidt had quit Apple's board as Google and Apple went head-to-head in smartphones, Apple with its iPhone and Google with its Android software.
Isaacson wrote that Jobs was livid in January 2010 when HTC introduced an Android phone that boasted many of the popular features of the iPhone. Apple sued, and Jobs told Isaacson in an expletive-laced rant that Google's actions amounted to "grand theft."

"I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong," Jobs said. "I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."

Jobs used an expletive to describe Android and Google Docs, Google's Internet-based word processing program. In a subsequent meeting with Schmidt at a Palo Alto, California, cafe, Jobs told Schmidt that he wasn't interested in settling the lawsuit, the book says.

"I don't want your money. If you offer me $5 billion, I won't want it. I've got plenty of money. I want you to stop using our ideas in Android, that's all I want." The meeting, Isaacson wrote, resolved nothing.

The book is clearly designed to evoke the Apple style. Its cover features the title and author's name starkly printed in black and gray type against a white background, along with a black-and-white photo of Jobs, thumb and forefinger to his chin.
The biography, for which Jobs granted more than three dozen interviews, is also a look into the thoughts of a man who was famously secretive, guarding details of his life as he did Apple's products, and generating plenty of psychoanalysis from a distance.
Jobs resigned as Apple's CEO on Aug. 24, six weeks before he died.
Doctors said Thursday that it was not clear whether the delayed treatment made a difference in Jobs' chances for survival.

"People live with these cancers for far longer than nine months before they're even diagnosed," so it's not known how quickly one can prove fatal, said Dr. Len Lichtenfeld, deputy chief medical officer of the American Cancer Society.

Dr. Michael Pishvaian, a pancreatic cancer expert at Georgetown University's Lombardi Comprehensive Cancer Center, said people often are in denial after a cancer diagnosis, and some take a long time to accept recommended treatments.
"We've had many patients who have had bad outcomes when they have delayed treatment. Nine months is certainly a significant period of time to delay," he said.

Fortune magazine reported in 2008 that Jobs tried alternative treatments because he was suspicious of mainstream medicine.
The book says Jobs gave up Christianity at age 13 when he saw starving children on the cover of Life magazine. He asked his Sunday school pastor whether God knew what would happen to them.
Jobs never went back to church, though he did study Zen Buddhism later.

Jobs calls the crop of executives brought in to run Apple after his ouster in 1985 "corrupt people" with "corrupt values" who cared only about making money. Jobs himself is described as caring far more about product than profit.
He told Isaacson they cared only about making money "for themselves mainly, and also for Apple — rather than making great products."
Jobs returned to the company in 1997. After that, he introduced the candy-colored iMac computer, the iPod, the iPhone and the iPad, and turned Apple into the most valuable company in America by market value for a time.

The book says that, while some Apple board members were happy that Hewlett-Packard gave up trying to compete with Apple's iPad, Jobs did not think it was cause for celebration.
"Hewlett and Packard built a great company, and they thought they had left it in good hands," Jobs told Isaacson. "But now it's being dismembered and destroyed."

"I hope I've left a stronger legacy so that will never happen at Apple," he added.
Advance sales of the book have topped best-seller lists. Much of the biography adds to what was already known, or speculated, about Jobs. While Isaacson is not the first to tell Jobs' story, he had unprecedented access. Their last interview was weeks before Jobs died.

Jobs reveals in the book that he didn't want to go to college, and the only school he applied to was Reed, a costly private college in Portland, Oregon. Once accepted, his parents tried to talk him out of attending Reed, but he told them he wouldn't go to college if they didn't let him go there. Jobs wound up attending but dropped out after less than a year and never went back.

Jobs told Isaacson that he tried various diets, including one of fruits and vegetables. On the naming of Apple, he said he was "on one of my fruitarian diets." He said he had just come back from an apple farm, and thought the name sounded "fun, spirited and not intimidating."
Jobs' eye for simple, clean design was evident early. The case of the Apple II computer had originally included a Plexiglas cover, metal straps and a roll-top door. Jobs, though, wanted something elegant that would make Apple stand out.
He told Isaacson he was struck by Cuisinart food processors while browsing at a department store and decided he wanted a case made of molded plastic.

He called Jonathan Ive, Apple's design chief, his "spiritual partner" at Apple. He told Isaacson that Ive had "more operation power" at Apple than anyone besides Jobs himself — that there's no one at the company who can tell Ive what to do. That, says Jobs, is "the way I set it up."

Jobs was never a typical CEO. Apple's first president, Mike Scott, was hired mainly to manage Jobs, then 22. One of his first projects, according to the book, was getting Jobs to bathe more often. It didn't work.
Jobs' dabbling in LSD and other aspects of 1960s counterculture has been well documented. In the book, Jobs says LSD "reinforced my sense of what was important — creating great things instead of making money, putting things back into the stream of history and of human consciousness as much as I could."
He also revealed that the Beatles were one of his favorite bands, and one of his wishes was to get the band on iTunes, Apple's revolutionary online music store, before he died. The Beatles' music went on sale on iTunes in late 2010.

The book was originally called "iSteve" and scheduled to come out in March. The release date was moved up to November, then, after Jobs' death, to Monday. It is published by Simon & Schuster and will sell for $35.

Isaacson will appear Sunday on "60 Minutes." CBS News, which airs the program, released excerpts of the book Thursday.

Thursday, October 20, 2011

Apple loses round in Wall St.'s expectations game

Apple did just about everything right in its latest quarter. The company increased its profit by more than 50 percent and boosted revenue by nearly 40 percent over the same quarter last year.

It was the second best three-month period ever posted by the revered maker of the iPhone, iPad and iPod. Even more impressively, Apple pulled it off against a backdrop of economic uncertainty and fears of another recession. But by the sometimes absurd logic of Wall Street, it was a disaster.

Apple Inc.'s shareholders awoke on Wednesday morning to headlines like "Apple Loses Some of Its Shine", and then proceeded to lose about $22 billion on paper, as their stock dropped by more than 5 percent —all because Apple failed to manage the analyst expectations that can make or break a stock.
Apple's numbers didn't surpass the high bar set by roughly 50 securities analysts who follow the company's stock. It's another reminder of how difficult it can be for even the most prosperous companies to please Wall Street quarter after quarter.

"It's a rough game," said BGC Financial analyst Colin Gillis. "Apple has been so well for so long that it has gotten itself into a position where it has to set a new (earnings) record every quarter. Now, some of the momentum has been broken."
The backlash to Apple's fiscal fourth-quarter report, released late Tuesday, could very well turn out to be a gross overreaction. If so, this is a prime buying opportunity for investors willing to go against grain.
Apple suggested as much as by issuing a jolly outlook for the current quarter, which includes the holiday shopping season. The projections call for earnings and revenue above analyst estimates, an anomaly for a company that makes a habit of lowballing its quarterly predictions. Analysts have caught on to Apple's tactics, so they deliberately set their estimates above the company's forecast. Gillis' rule of thumb, for instance, is to expect Apple's quarterly revenue to be about 20 percent above the company's publicly-stated target and for earnings to be about 40 percent higher.

The Oct. 5 death of Apple co-founder and CEO Steve Jobs throws a new twist into the equation.
Now that Tim Cook is chief executive, analysts must now figure out whether the rules of Apple's expectations game have changed. ISI analyst Brian Marshall thinks that's unlikely because Peter Oppenheimer, Apple's chief financial officer for the past seven years, remains in charge of the numbers. What's more, Cook has promised not to mess with the "magic" that has increased Apple's market value by nearly $300 billion during the past decade and established it as technology's most valuable company.

Trying to figure out how much money a company is going to make every three months is a little like pulling a rabbit out of a hat. Most major companies provide some guidance to help analysts because it helps keep their stock prices relatively stable. Big drops, in particular, are unwelcome because they can raise anxiety among customers and business partners. For technology companies that offer employees stock in lieu of lavish salaries, those dips can affect morale.

Some companies, though, refuse to dance to Wall Street's tune. Internet search leader Google Inc., for instance, has never provided guidance during any of its 29 quarters as a publicly-held company because founders Larry Page and Sergey Brin don't want business decisions to be influenced by a short-sighted number determined by a group of outsiders.

This refusal has been a bit of a double-edged sword for Google. The company has exceeded analyst estimates in most quarters, helping to boost its stock price after the quarterly numbers, but there have been a handful of letdowns that might have been avoided if management had been more transparent.

Apple's big mistake in its latest quarter centered on the impact the Phone 4S — already a hit in the current quarter— would have on its revenue in the just-completed quarter. As word got out that the next generation of the iPhone would be hitting the market in the fall, more shoppers decided to hold off on buying the version already in the stores during the summer.

The result: Apple sold 17.1 million iPhones from July through September, below the 20 million units that analysts had factored into their projections. That left the company, which is based in Cupertino, Calif., with earnings per share of $7.07 on revenue of $28.3 billion instead of the earnings per share of $7.28 per share on revenue of $29.4 billion projected by analysts.

Missing the mark inevitably led to some second guessing, particularly now that Jobs is no longer around. Cook had been running Apple since Jobs went on medical leave in January, but he didn't take the CEO job until Aug. 24 with about five weeks left in the company's fiscal fourth quarter.

Apple could have avoided the problem that caused the quarterly earnings miss by releasing the iPhone 4 in the middle of the reporting period, Gillis said. That's a strategy that Jobs had sometimes adopted when Apple was preparing to release a hotly anticipated device that threatened to cannibalize sale of an earlier product.
If the iPhone 4S had been in stores just during the final week of September, the sales would have been enough for Apple to meet analyst expectations. That's based on Apple's sales of 4 million units of the iPhone 4S since its Oct. 14 release.

"The lesson to be learned here is to be careful when you have a new product coming out," Marshall said. "Even in a tough economy, people still want the latest and greatest device and they are willing to keep some money in their back pocket to buy it."

Marshall, by the way, expects Apple to more than make up for its shortfall in the latest quarter: he foresees nearly 27 million iPhones being sold in the current quarter and expects the company's stock price to hit $500 within the next year. Apple shares fell $23.62 Wednesday to close at $398.62.

Thursday, October 13, 2011

12 ways iOS 5 will change the way you use your iPad

Apple is launching its latest mobile operating system, iOS 5, today. While most of the focus has been on the new features it will introduce on iPhone, the latest iOS will actually change the way many iPad owners use their devices. Here's a look a some of the new features and changes that stand out.

1. New multitouch gestures By swiping four or five fingers upwards, you'll bring up the multitasking bar. Swiping four or five fingers to the left and right while in any app lets you flip between apps without needing the multitasking bar. The app to the right will be the one you last used.

The notification center is here
2. Split keyboard By holding down the "hide keyboard" icon and dragging up, you'll be able to split the on-screen keyboard in half, making it much easier to type with your thumbs while holding the iPad with two hands. Holding the "hide keyboard" icon and letting go opens a popup dialog where you can also choose to undock the keyboard to the middle of the screen.
3. Synched notifications Much has been made of the completely redesigned notifications in iOS 5 for iPhone, including the unobtrusive new Notification Center. This feature is present on the iPad as well, but another nice function is the ability for notifications to pop up on your iPad and iPhone lock screens simultaneously. Dismissing the notification on one device also dismisses it on the other.
4. Tabbed browsing The iPad's Safari web browser is already great, but iOS 5 makes it better with the addition of tabs. These work just like on your desktop computer's browser, allowing for quick switching between sites.
5. Browser reading list and reader view Blog posts and other stories you want to save for later can now be added to Safari's reading list for easy access. When you're reading a story, you can switch to the reader view, which pops up a new window containing a nice, clean text version of the story with pictures.

6. Texting with iMessage iPad finally gets in on texting with iMessage. This new app allows you to text with other iOS device users free of charge. Taking things a step beyond basic texting, it also features group messaging, read receipts, photo/video sharing, and the ability to see when other users are typing.
7. Photostream picture syncing The iPad photo app ties into Apple's iCloud service in a great way. If you've got photo syncing enabled in iCloud, any images you take with your iPhone's camera or save to another iOS device will automatically appear in real time on your iPad for instant viewing.
8. Email and Calendar enhancements The email app now supports rich text editing for writing emails, including bold, italics, and underlining. Apple has also updated the calendar app to finally support swiping between months with a nice page-turning animation.

The Newstand interface
9. Newsstand This new permanent fixture of the iPad's screen is where the device gathers together all of your news reading apps and digital magazines/newspapers in one place. Tapping the Newsstand icon expands rows of bookshelves on screen containing these apps.

10. Typing shortcuts The iPad is a lot easier to type on than the iPhone, for sure, but iOS 5 makes it even easier to say what you want using shortcuts. With this feature, you can assign frequently used text, such as "see you soon," to shorter trigger words, like "sys." Typing these in any app will expand the corresponding text automatically.
11. Twitter integration Twitter is everywhere in iOS 5 for iPad. From within Safari, mail, maps, YouTube, and other apps, you can easily tweet the content you're looking at — maps, videos, photos, and more.

12. Global dictionary Finally, tapping and holding your finger on any word on web pages and in most apps will open a popup menu containing the option to display the definition of the word. This feature actually originated in iBooks.
Power up your iPad
In addition to these major features, iOS 5 for iPad introduces a number of smaller tweaks and extra functionality to Apple's popular tablet. Overall, the new OS is a huge update, with features that will make using your iPad easier, faster, and more powerful.

Tuesday, October 11, 2011

Jobs death caused by respiratory arrest, cancer

A copy of Steve Jobs' death certificate made public Monday indicates that the Apple Inc. co-founder died of respiratory arrest resulting from pancreatic cancer that had spread to other organs.
Jobs died last Wednesday at age 56. Apple did not disclose his cause of death, but Jobs had been in poor health for a number of years.

He battled pancreatic cancer in 2004 and underwent a liver transplant in 2009 after taking a leave of absence for unspecified health problems. He took another leave of absence in January — his third since his health problems began — and resigned in August, handing the CEO job over to his hand-picked successor, Tim Cook.

The death certificate, released by the Santa Clara County Public Health Department and obtained by The Associated Press, said Jobs had a metastatic pancreas neuroendocrine tumor for the past five years. It listed his immediate cause of death as respiratory arrest.
He died at his home in Palo Alto. No autopsy was performed, and he was buried on Friday. Details of the certificate were reported earlier by Bloomberg News.

The certificate listed Jobs' occupation as a high-tech entrepreneur. Jobs started Apple Inc. in his parents' Silicon Valley garage with friend Steve Wozniak in 1976. Both men left Apple in 1985 — Jobs following a clash with then-CEO John Sculley.
Jobs returned in 1997 as interim CEO after Apple, then in dire financial dire straits, bought Next, a computer company he started. That was the start of Apple's remarkable turnaround, which continues today with the popularity of products such as the iPhone, iPod and iPad.

Jobs died the day after Apple announced its latest iPhone, the 4S, which will go on sale Friday. Some fans and investors were initially disappointed that Apple didn't come out with a smartphone that is radically different from the existing iPhone 4. But Apple said first-day pre-orders of the device on Friday topped 1 million — higher than the record set by the iPhone 4 when it was released last year.

Apple employees will hold a memorial service to celebrate Jobs' life on Wednesday, Oct. 19 at 10 a.m. at the company's Cupertino, Calif., campus, according to an email sent out by Cook. An Apple spokesman said that the company will not be holding any public services.

Wednesday, October 05, 2011

Apple gets no love from Wall Street for new iPhone

The new iPhone is faster, has a better camera and allows you to sync content without needing a computer. It includes a futuristic, voice-activated service that responds to spoken commands and questions such as "Do I need an umbrella today?" It will now be available to Sprint customers as well as those from AT&T and Verizon Wireless.

But there's a catch. Apple named it 4S when most people were expecting the iPhone 5. Immediately, tech bloggers and Apple fans alike began to wonder if this new iPhone was not as cool as they had hoped. Investors were disappointed, too. Apple's stock fell more than 5 percent before getting a late bump.

If Tuesday's unveiling seemed like a letdown, it was because Apple didn't do a good job of managing expectations. That's a familiar problem for Apple, whose penchant for secrecy invites hyperbolic speculation between its product announcements. Given that it had been 16 months since the previous iPhone hit the market, imaginations had even more time to run wild this time.

"This is the typical Apple scenario: People keep wanting it to do the impossible," said Tim Bajarin, a Creative Strategies analyst who has been following the company for decades.

Apple's approach to the event didn't do any favors for Tim Cook in his first major public appearance since he succeeded Steve Jobs as CEO six weeks ago. Jobs, the Apple visionary and co-founder, relinquished the reins to focus on his health problems.

Cook handled his presentation in a pedestrian fashion that lacked Jobs' flair. The format and stage setting were similar to the presentations that Jobs had orchestrated so masterfully, giving Cook little opportunity to make his own mark, said Adam Hanft, a marketing consultant who runs his own firm in New York.
"It wasn't fair to Tim in his inaugural because there he didn't have any product to show off that was a real barnburner," Hanft said.

"This allowed him to get his sea legs, but he still needs to find his voice and style. They need to come up with a new setting that is equally Apple-like aesthetically, but not the same that they had while Steve was there."
Even though the iPhone 4S is an improvement over its predecessor, it isn't being perceived as a breakthrough partly because it's not being branded as an iPhone 5, as most people had been expecting, said Prashant Malaviya, a marketing professor at Georgetown University.

Not all investors were disappointed.
Stephen Coleman, chief investment officer for Daedalus Capital and an Apple investor since 2004, calls his Apple stock "the safest investment that I own." He said Tuesday's upgrades were "incremental" — and praised Apple for not messing too much with a model that's working.

"To those who say they're underwhelmed, I'd say they've been fast asleep," Coleman said. "Anyone who's been paying attention at all would have to be dazzled by the product, and earnings."
The stock has risen more than 15 percent this year, at one point hitting an all-time high of $422.86. It has nearly quadrupled since the first iPhone was announced in 2007. The device has been the cornerstone of one of the most remarkable runs in technology history. Apple is now one of the world's most richly valued companies, holding its own against oil companies and international conglomerates.

"What is there to lament?" Coleman said. "For people like me, it's peace on earth. This is one of the great economic stories of our time."
The new iPhone has an improved camera with a higher-resolution sensor. The processor is faster — the same A5 chip found in the iPad 2 — so the phone will be able to run smoother, more realistic action games. It's also a "world phone," which means that Verizon iPhones will be useable overseas, just as AT&T iPhones already are.

The fact that a more radical revision of the phone was a no-show leaves room for speculation that Apple will reveal a new model in less than a year, perhaps one equipped to take advantage of Verizon's and AT&T's new high-speed data networks.

There had also been speculation that Apple would include a chip that could talk to payment terminals at retail stores, turning the iPhone into a mobile wallet. Competitors are starting to include this capability in their phones, though the payment systems are still immature. The iPhone 4S doesn't have this.
The iPhone 4S will come with new mobile software that includes such features as the ability to sync content wirelessly, without having to plug the device to a Mac or Windows machine. The phone includes Siri, which lets people speak questions and commands and represents an advanced version of speech-recognition software found on other phones.

Apple also unveiled software that can send greeting cards through the postal system for $2.99 each.
Cook said the most recent iPhone, which came out in June 2010, sold more quickly than previous models, but the iPhone still has just 5 percent of the worldwide handset market. Among smartphones, devices running Google Inc.'s Android software make up 43 percent of the market in the second quarter, while the iPhone captures 18 percent, according to Gartner Inc.
Apple is hoping to grow that share with the iPhone 4S — something it can do by luring new customers from Sprint and elsewhere, even if existing owners don't see a need to upgrade.
Bajarin, the longtime Apple watcher, is confident that Apple will quickly overcome the perception problem once technology reviewers get a better handle on all the new bells and whistles. He believes that the improved camera and speech-recognition technology are compelling enough additions to make the iPhone 4S another hit for Apple.

"People are going to get over their initial disappointment and want this phone," he said.
Apple's new mobile software, iOS 5, will also be available on Oct. 12 for existing devices — the iPhone 4 and 3GS, both iPad models and later versions of the iPod Touch.

Apple said Oct. 12 will also mark the launch of its new iCloud service, which will store content such as music, documents and photos on Apple's servers and let people access them wirelessly on numerous devices. One component is a $25-per-year service, called iTunes Match, that will allow people to play their personal jukeboxes on any device with iTunes software instead of keeping them tethered to a personal computer that must be synced with other devices.

The new phone will come in black or white. It will cost $199 for a 16 gigabyte-version, $299 for 32 GB and $399 for 64 GB — all with a two-year service contract requirement. Pre-orders will begin Friday with availability on Oct. 14.
The previous version, iPhone 4, will now cost $99 for 8 GB. The 2009 model, the iPhone 3GS, will be given away for free with 8 GB. Both also require a two-year service contract.

Don't expect to see an iPhone available with prepaid, contract-free service plans any time soon — at least not with AT&T. Ralph de la Vega, AT&T's head of wireless and consumer services, said in an interview that the carrier has no plans to offer iPhones with prepaid plans, because even phones that are free with two-year contracts — namely the iPhone 3GS — would cost customers a significant amount up front. Wireless companies typically subsidize the cost of phones and make that back from monthly service fees over the life of the contract.

Apple also unveiled a new line of iPods, including a Nano model with a multi-touch display that promises to be easier to navigate.
Apple's stock fell $2.10, or 0.6 percent, to close Tuesday at $372.50 after dropping earlier to $354.24.

Tuesday, October 04, 2011

Facebook stepping up security with outbound link scan

Love them or hate them, the new changes to Facebook will probably bring another wave of users to the immensely popular social network. And with those new users will probably come new threats and viruses and other malicious attacks from those who target the unwary. To combat those threats, Facebook announced today that it has partnered with online security firm Websense to help keep Facebook users safe from unsavory links.

Beginning immediately, every time you click on a link in Facebook, the new system will check the link against Websense's known threat database. If the link is determined to be safe, you won't notice a thing, but if it's not, you'll see a message warning you about a potential threat, explaining why the link was flagged as such, and suggesting you return to the previous page. You will also have the option of ignoring the warning and continuing on to the link's destination.

This is the latest round in Facebook's fight against viruses and malware being spread via its website, but it's not the only protection in place. Facebook also has its own proprietary database of malicious URLs and other threats, and it has also been partnered with Web of Trust since May. Websense also offers a Facebook app called Defensio, which can be configured to limit the types of links that can be posted to a user's wall.

Monday, October 03, 2011

With Kindle Fire, Amazon's digital ambitions burn

Amazon's unveiling of the Kindle Fire tablet computer sends a bright-hot message: The online retailer is ready to rival iPad maker Apple in an effort to be the world's top digital content provider.

It may sound odd coming from a company that pioneered online sales of physical products, selling its first book, Douglas Hofstadter's "Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought," in 1995. But since it first entered the digital market in 2006 with its video download store, Amazon has bet consumers will pay for high-quality digital content.

In addition to the millions of actual items it sells, which range from toys to toothbrushes, Amazon's trove of digital content now includes more than 1 million e-books, 100,000 movies and TV shows and 17 million songs. This is about 1 million fewer songs than iPad maker Apple Inc. sells, but more than twice as many e-books and many thousands more TV shows and movies. Inc. CEO Jeff Bezos is confident that its content is what will help the Kindle Fire do better than others who have trotted out tablets.
"The reason they haven't been successful is because they made tablets. They didn't make services," Bezos said in an interview after his company unveiled the tablet at a New York media event Wednesday.

Bezos, a 47-year-old former Wall Street money manager, built Amazon on exactly this sort of confidence. He started the company on the theory that a Web-based book store would resonate with consumers, since it seemed like the easiest way to browse millions of titles at once.

He was right. The company grew rapidly and Amazon began trading publicly in May 1997, despite never having turned a profit. It took five more years — and the addition of product categories like CDs, DVDs and consumer electronics — before the online retailer reported any net income. These days, Amazon consistently reports strong growth: In the most recent quarter, it earned $191 million on $9.91 billion in revenue.

It was Apple that moved into digital content first, however. With the arrival of Apple's iPod digital music player, which first came out in 2001, Apple figured consumers would be willing to pay for legal, high-quality digital music they could download to the devices. Apple became a major player early on, making deals with major record labels to sell digital tunes through its iTunes Store in 2003. Soon the iPod became more multimedia-savvy: Apple added TV shows in 2005 and movie downloads a year later.

Amazon soon entered the market itself, rolling out its own digital video downloading service in 2006 and music downloading service a year later.
It was in 2007, though, that things really heated up. That's when Amazon rolled out its first Kindle e-reader, upending the book market once again by turning the focus from costly paper books to electronic ones that could be delivered quickly and cheaply to customers on a reading device.

The Kindle rapidly grew the company's e-book business, and Amazon said in May that it was selling more e-books than physical copies of books. But the Kindle Fire's ability to show e-books, surf the Web, stream movies and TV shows and support apps positions it as an even better catalyst for Amazon's digital goods sales.

The price will probably help, too: When it goes on sale Nov. 15, it will cost $199, which is less than half of the $499 you'll pay for Apple Inc.'s cheapest iPad and $50 less than book seller Barnes & Noble Inc.'s Nook Color e-reader. This leaves buyers with plenty of money left over to spend on content.

"It's important to remember at the end of the day that Amazon's core business is retailing and this is a way to sell more digital media on a sort of 7-inch vending machine," NPD Group analyst Ross Rubin said.

The Kindle Fire, which runs Google Inc.'s Android software, is clearly meant for gobbling up Amazon's digital media in particular. While most Android tablets include access to Google's Android Market for downloading games and apps, the Fire will eschew that in favor of Amazon's own app store. And while the tablet doesn't have much storage space — 8 gigabytes, compared with 16 GB on the cheapest iPad — Amazon is offering users free Web-based storage for any digital content they buy from Amazon.

Another weapon in Amazon's arsenal: In hopes of keeping Kindle Fire users purchasing both digital and actual items, the tablet includes a free month of Amazon's premium shipping service, Amazon Prime. Prime, which costs $79 per year, gives users unlimited two-day shipping on any items they buy from Amazon, as well as free access to a library of 11,000 streaming movies and TV shows. This is about half of what Netflix Inc.'s streaming library has.
Amazon has never said precisely how many Kindle e-readers it has sold, but its higher sales of e-books than print books indicates it's a strong performer. Given this, and the general popularity of tablets, expectations are high for the Fire.

Rubin thinks consumers will become fans of the tablet, saying it offers a more complete media consumption experience than what Barnes & Noble has provided with the Nook Color, which came out last year.

Forrester Research analyst Sarah Rotman Epps thinks Amazon could sell as many as 5 million Fires by the end of the year, but thinks it will probably be closer to 3 million since it's coming out so late. Apple, by comparison, has sold nearly 29 million iPads since it released the first one in April 2010, and over 9 million in the June quarter alone.

Of course, in addition to being the new tablet on the block, the Kindle Fire faces other challenges. On the content side, the Amazon Appstore currently includes more than 16,000 apps, but this is just a small fraction of the 425,000 apps in Apple's App Store, over 100,000 of which are tailored specifically for the iPad. On the tablet side, the device's screen is on the small side, which means less space for watching movies and more panning around when surfing the Web. And it will only be able to access the Internet over Wi-Fi, not over wireless carriers' high-speed data networks.

Still, Epps believes Amazon's decision to lead with content and services, rather than hardware, will help it prosper with the Kindle Fire.
"Apple will still be the clear market leader, but Amazon will still be a clear number two because of that strategy," she said.