TechFlash: Seattle's Technology News

From Amazon.com

Amazon.com early on made a habit of pricing digital versions of new release books at $9.99, well below hardcover list price. That irked publishers, who thought the $9.99 standard would devalue books in the minds of consumers. Now, with Apple offering publishers the ability to set higher price points (up to $14.99) on e-books, Amazon is being forced to accept such terms as well.

Now some publishers are betting that consumers will spend even more for so-called "enriched" e-books, equipped with special features. Case in point: David Baldacci's new novel, "Deliver Us From Evil," which will be available in "enriched" digital form for $15.99.

Google's tussle with the Chinese government over censorship rules has shined a spotlight on other large U.S. technology companies doing business in China, including Amazon.com. Ahead of a hearing on global internet freedom earlier this month, Sen. Dick Durbin asked the nation's biggest tech firms to detail their China business operations and explain their "future plans for protecting human rights, including freedom of expression and privacy, in China." Amazon's response to Durbin contains some interesting information about its physical facilities in China, but the ecommerce giant sidestepped any serious discussion of censorship issues.

Some U.S. universities are doing pilots with Kindle readers, testing them as a replacement for printouts and textbooks in the classroom. Now a non-profit organization is taking Kindle pilots global, looking to get the Amazon device "into the hands and minds of people in the developing world" to promote education and literacy. Kind of like One Laptop Per Child, but with Kindles.

The non-profit, Worldreader.org, has a strong Amazon connection. One of its co-founders is David Risher, a former Amazon senior vice president of product and platform development (and a Microsoft veteran). According to the Worldreader.org website, the organization is conducting the "world's first-ever e-reader test" in the West African nation of Ghana starting Monday.

Zappos CEO Tony Hsieh

It's been more than four months since Amazon.com completed its acquisition of online shoe retailer Zappos.com in a $1 billion-plus deal. Now Zappos CEO Tony Hsieh — who continues to run his company under new owner Amazon — is talking about Zappos' strategy going forward, including its expansion into new product categories. Hsieh says Amazon is taking a hands-off approach to Zappos, letting the quirky retailer do its own thing, but also reveals how life is changing under Amazon.

TechFlash is pleased to welcome BDO, an accounting, tax and valuation firm with deep roots and expertise in the technology industry, as an annual sponsor. We appreciate BDO’s decision to support our mission of informing and bringing together the Seattle region’s technology community. Sponsors make TechFlash possible, and we hope you’ll join us in thanking BDO for its support.

Through the annual sponsorship, BDO will engage with the technology community in a variety of ways -- including sponsor messages on the site and in the daily TechFlash email newsletter. The BDO brand will become a familiar sight to TechFlash readers. The firm’s leaders will also be active participants in TechFlash events, including the upcoming March 23 TechFlash Live at the Showbox Sodo. (Maybe they'll even join us in the official sport of TechFlash, ping-pong.)

Drugstore CEO Dawn Lepore

Drugstore.com is in shopping mode. The Bellevue-based company, which just acquired Salu, operator of the skinstore.com website for skin creams and cosmetics, is planning more acquisitions, according to CEO Dawn Lepore. Lepore told Bloomberg BusinessWeek the company is looking for other businesses in its core product areas of vitamins, vision and beauty products — specifically deals in the $40 million to $60 million range.

“I want to take over businesses that are in our sweet spots,” Lepore said. "Acquisitions should be an ongoing part of our strategy.”

Amazon.com hasn't explained the weekend glitch that resulted in deep discounts on many graphic novels and sparked a brief buying frenzy. Now Publishers Weekly reports Amazon has removed the buy button on graphic novels from Marvel, Dark Horse, IDW and other publishers distributed by a company called Diamond Comic Distributors. The report says the removal of the buy buttons is "apparently an effort to correct the glitch that caused the wild discounting of graphic novels."

Separately, Bleeding Cool, which has been tracking the Amazon episode, says some surprising graphic novel discounts are now popping up on the Barnes & Noble website.

Amazon.com's plans for a warehouse in Canada have stirred a lively debate up north, with the Canadian Booksellers Association warning that Amazon's presence "will detrimentally affect independent businesses and would raise serious concerns over the protection of our cultural industries."

Now an Amazon executive is firing back, calling such claims "preposterous." Paul Misener, Amazon's vice president of global public policy, told The Globe & Mail that Amazon has spent "tens of thousands of dollars" supporting Canadian culture since launching the Canadian version of its website in 2002.

The U.S. Patent and Trademark Office is confirming Amazon.com's controversial 1-Click patent following a re-examination that lasted more than four years.

Amazon's 1-Click has come under a lot of fire over the years from critics who question whether such a broad technology should be patented at all. It refers to the process by which online shoppers make purchases with a single click, having previously entered their payment and shipping information.

Online shoe and apparel retailer Zappos (now part of Amazon) has been prepping a new ad campaign featuring Avenue Q-style puppets modeled on its employees. We could only get our hands on a still image last week, but now there's a video of one of the ads, which re-enacts a free-wheeling customer service call. Again I'm wondering: would Amazon ever do a campaign like this?

Valeri Kim, winner of the 2009 tournament. (Matt Hagen photo)

We've been working on a surprise for our upcoming TechFlash Live event, March 23: We've arranged to have ping-pong tables at the Showbox Sodo for open recreational play during the networking portion of the event. It will be a fun warm-up for our second annual TechFlash Ping-Pong Tournament, to be held this summer.

So if you're thinking about competing in the tournament this summer, or just in the mood for some ping-pong, you can register here for the March 23 event. As an added bonus, we'll open for ping-pong a little early, at 4 p.m., and you'll be able to play until the program begins later that evening. We'll also be scouting the tables to help us pick seeds for the tournament, when the time comes.

With Amazon.com silent on the topic of future Kindle readers, observers are left to read the tea leaves, i.e. the job postings at Lab 126, Amazon's Kindle division in Cupertino, Calif. The latest insight? A job opening for a software development engineer to help "provide an innovative Embedded Web Browser."

Given the limitations of Kindle's current "experimental" web browser, it makes sense that Amazon wants to beef up in this area, particularly with Apple's iPad about to hit the market. But having a more powerful web browser could also complicate Kindle's business model.

Forrester Research is forecasting continued growth for ecommerce over the next five years, saying U.S. online retail sales will hit $248.7 billion by 2014. Amazon, which has been grabbing market share during the recession, will likely be a big beneficiary of that growth. Read on for more insights from the report, which also sheds light on Amazon's acquisition of Zappos.com.

Image via Amazon.com

Did a weekend computer glitch at Amazon.com spark a buying frenzy by graphic novel fans? Publishers Weekly reports that a "computing error heavily discounted hundreds if not thousands of graphic novel titles," and word spread quickly on Twitter of the "unbelievable bargains." According to the report, boxed set hardcover collections that normally sell for more than $100 were going for $14.99.

I've asked Amazon for comment on this. Right now on the Amazon home page, there are indeed three graphic novels in the top five best-selling books, though they are priced at $62.99, perhaps indicating Amazon has fixed the problem.

[Update: Amazon never responded, but Bleeding Cool, which has been closely tracking the episode, says Amazon canceled the orders of many people who bought graphic novels at bargain prices during the glitch, and is now giving them $25 in Amazon gift credit.]

Amazon.com is retaliating against a newly minted Colorado sales tax law. The measure, recently signed by Colorado Gov. Bill Ritter, requires online retailers like Amazon to inform Colorado residents how much they owe in sales tax on web purchases and provide a summary of people's web purchases to the state.

Amazon is responding by cutting off its Colorado affiliates — businesses that link to Amazon products and receive a fee on any resulting sales. It's a sign that Amazon will continue to play hardball with states that try to tap the company for sales tax collection.

[Updated with response from Colorado Gov. Bill Ritter, state Department of Revenue, and Colorado affiliate.]