PALO ALTO, Calif. — Amazon CEO Jeff Bezos took the stage at a large airplane hangar in Santa Monica, Calif., this week and presented a dazzling, methodical, hourlong disquisition on the state of the technology business. He began by explaining why most of the iPad's competitors have failed: "They're gadgets," he said, "and people don't want gadgets anymore. They want services that improve over time."
He spent five minutes explaining Amazon's rock-bottom pricing strategy. The company, he explained, aims to "align with our customers," so the firm only makes money when people "use our devices, not when they buy our devices." Bezos beamed as he showed how Amazon is remaking the book business. In the first year after getting a Kindle, people buy nearly five times as many books, he said. That should put a stop to the snobbish argument that Amazon is killing "literary culture."
Along the way, Bezos introduced some new products_there's an e-reader, the Kindle Paperwhite, with a brilliant illuminated screen, and new Kindle Fire HD tablets that are decked out with faster processors and better displays than last year's Fire. But the particulars about the new gadgets felt like a sideshow to the larger story. Ever since it launched the Kindle, we've known that Amazon had ambitions to become a full-fledged hardware company. Last year, when it released the bare-bones Kindle Fire, we thought we had a sense of what kind of hardware company Amazon wanted to become_it would create low-end devices, sell them at cost, and aim to make money through content to read and watch on those devices.
This week Bezos turned that narrative on its head. Amazon, he declared, doesn't want to make devices that you settle for. Instead, it's going after the iPad directly, aiming to build tablets with better specs at lower prices. More importantly, he wants to build devices that people love to use just as much as anything bearing a fruity logo. "We are not building the best tablet at a certain price," Bezos said. "We have just built the best tablet at any price."