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Software, of course, is an important part of Ama-
zon’s operations because better systems hold down
labor costs, increase accuracy and speed, enhance the
customer experience, and support effective planning.
Supply-chain software, for example, uses a complex
formula to choose which goods should be carried in
distribution centers and which should be drop shipped.
Yet another algorithm constantly recalculates item
popularity ratings to choose which goods to store in
the most highly frequented sections of warehouses.
Amazon is also a pioneer in the development of
several operations technologies:
• “One-click” buying allows customers to make final
purchases with a single mouse click. (The process is
patented and licensed to other companies.)
• Amazon was one of the first online retailers to let
customers post online product reviews, which not
only boost sales but also contribute to a sense of
community among users.
• Customers can review their order histories, create
wish and favorites lists, share information with
friends, receive personalized recommendations and
gift-giving reminders, and tag items with custom-
ized category data.
Amazon’s operations software is so popular with
other firms that the company has launched a feature
called Amazon Web Services, which allows indepen-
dent programmers and merchants to access Amazon’s
library of software and adapt it for their own use. The
library is free unless the “borrower” intends to sell
through Amazon, in which case there’s a 15 percent
commission on each sale. The service has proven so
popular that 30 percent of Amazon’s sales are now
conducted by other merchants. In February 2009, as
part of Amazon Web Services, Amazon launched Ama-
zon SimpleDB, a system that allows businesses to store
and quickly retrieve simple data. Some companies
already rely on Amazon’s expertise to manage their
websites. Target and Office Depot, for instance, con-
tract their online presence to Amazon.
And now—for consumers—there’s Kindle, which,
ironically, hearkens back to Amazon’s origins as a
bookseller. Developed by an Amazon subsidiary called
Lab126, Kindle is a software–hardware platform for
reading electronic print material. The first-generation
Kindle device came out at the very end of 2007 and was
aimed primarily at readers of books, which Amazon
founder and CEO Jeff Bezos promptly labeled “the
last bastion of analog…. The vision [of Kindle],” he
hastened to add, “is that you should be able to get
any book—not just any book in print, but any book
that’s ever been in print—on this device in less than a
minute.”
Amazon now has 1,300,000 titles available for down-
load, but Kindle is designed to handle much more than
books. With this device, which doesn’t require a com-
puter, Amazon allows you not only to download 630,000
books, but even to subscribe to newspapers and maga-
zines, which will automatically be downloaded as soon
as new issues go to press. You can search for material
through Google, follow links from blogs and other web
pages, jot down notes on the page you’re reading, and
even capture selected passages with the equivalent of an
electric highlighter. Kindle 2 and Kindle DX, each with
larger displays and other new and improved features,
arrived in early 2009. Newer versions have been released
periodically since then, and there’s also a Kindle app for
the iPhone and iPad.
Eight months after its release, Amazon had sold
nearly $100 million worth of Kindles, and by the end
of the year, amid speculation that it was the iPod of the
book world, the Kindle had sold double its projected
sales figure (and equaled sales of the iPod in its first
year of release). Amazon does not disclose sales of Kin-
dle and Kindle-related content, but reports indicate
that it sold 8 million Kindles in 2010—a staggering
60 percent over analysts’ predictions. In July 2010, the
company did announce that it was selling 180 Kindles
for every 100 hardback books, and in January 2011, it
announced that Kindle sales had overtaken paperback
sales as well, with U.S. customers buying 115 Kindles
for every 100 paperback books.
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