Amazon Digital Books uses its proprietary format called MOBI (also called Kindle format), while Apple uses an open format called ePub

Wait! Apple is open?

There's an ongoing business axiom that defines customer service: "the customer is always right."

Publicly, this may be the proper posture. People like Tony Hsieh (CEO of Zappos and the author of the best-selling business book, Delivering Happiness) built his first business on making customers happy (the company was LinkExchange - which he sold to Microsoft for $265 million) and pushed the concept even further with Zappos (the online shoe store), which was also sold (but this time to Amazon was over one billion dollars). That being said, there are instances when the customer is not always right. In fact, let's be honest: sometimes the expectations of consumers is so far beyond the pale that anything the company does to try to please them will be met with grumbles and complaints.

The majority of customers simply want value.

They want their products or services to do what it says it will do - reliably. In this day and age, the challenge is that brands are being held to task in the online channels. Any individuals can complain in text, images, audio and video, instantly and for free online for the world to see. If you're in line at your favorite retailer and you're wondering why they don't open up a second cash register, you're just a tweet away from holding that company responsible for their store policies. The other day, I was reviewing the Facebook page for a major airline and there was one complaint that stood out: "I'll never fly with you again! I was stuck at the security line for over two hours!" What does security have to do with the airline? (Answer: nothing). Have you ever been on TripAdvisor (the popular online destination that rates hotels)? You'll see a constant stream of one and two-star reviews where individuals complain about things like a lack of chocolate on their pillows or not enough channels available on their TV (while at the same time commending the hotel for having a nice staff, clean rooms and a cheap rate - the main reasons the majority of people would chose a hotel).

Are we quickly devolving to the sad state of: "you can only please a few of the people some of the time"?

The evolution of customer service and brand loyalty is a topic that has captured the imagination of Fred Reichheld for over twenty years. In 1996, the Bain Fellow published his first book, The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value. Recently, Reichheld (along with co-author, Rob Markey) published a newly updated version of his 2006 seminal book, The Ultimate Question (now titled, The Ultimate Question 2.0). So, just what is the ultimate question that every business should be asking...

"How likely is it that you would recommend this company to a friend or colleague?"

If your company is doing well (and this doesn't mean you have to be perfect), your customers become your brand champions. They become the evangelists. They become the marketers. They are the ones who get your ideas to spread. "It turns out that people won't enthusiastically recommend your business to a loved one unless you have treated them in a very special way," says Reichheld via Skype. "It goes beyond the brand and loyalty. Social Media has made the model more apparent to businesses, but the roots of this concept go all the way back to the bible. It goes back to the idea that a name and a reputation are worth more than silver and gold. We created the Net Promoter Score system around the ultimate question to help businesses know - day by day - whether they are building their reputation or diminishing it."

Big or great?

While the simple and immediate feedback loop of deploying the Net Promoter Score (a system that allows customers to grade a brand on a scale from one to ten with a few, short questions) has been adopted by many businesses, the final results also empower a brand to think differently about the types of customers that they can be successful with. "There is no brand that is right for everyone," continues Reichheld. "A brand should be working very hard to make sure that the people who are buying their product or service are the people who it was intended to be sold to. They need to have a very clear focus. This means that when they get a Net Promoter Score of a nine or a ten from a customer, it's because they picked the right customer and they are appreciated for what they have to offer. Sadly, what we see historically is metrics around 'bigness,' meaning how many customers or how many units sold? What we should be looking at is a metric around greatness, not bigness."

So, is the customer always right?

"I don't think that the customer is always right any more than I think that the employees are always right or that a shareholder is always right," conceded Reichheld. "You do owe it to your business to understand the root cause of the feedback and what implications it has on your decision making, prioritization and your actions. But, there are criminals out there that are your customers. You want to keep those customers away. Not just from your cash registers but from your employees too, because they are abusive and they make life hell for everyone in your business. The Net Promoter Score is based on the golden rule that we should treat others the way we would want to be treated in their shoes, but it takes a lot of deep thinking to do this right. It's not superficial. Think about what actions a business takes when it gets a zero or a one score? The business should dig in to figure out what's wrong, try to fix it and understand how it feels to be in the customer's shoes, but it doesn't always mean that they are the right customers for your business."

The complete audio conversation between Reichheld and myself will be published this coming Sunday (October 30th, 2011) as episode #277 of Six Pixels of Separation - The Twist Image Podcast.

The above post is my twice-monthly column for the Montreal Gazette and Vancouver Sun newspapers called, New Business - Six Pixels of Separation. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original versions online here:

Montreal Gazette - Companies should focus on greatness, not 'bigness: ' author.

Vancouver Sun - The customer is (not) always right.




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I have been wanting one of these little guys for a long time, but ~$29 — come on. For $11.60? Hells yeah.
So I bought one about a month back, it was great move. Here are some of the scenarios that I have used or for, or are planning on using it for:
Taking to a coffee shop when I know I will need to charge my MacBook Air (helps to split the outlet to share the love).Every time I travel. Doubles as my iPhone charger and to help with the general lack of power outlets everywhere I go.Conferences. (see: Coffee Shops)It’s a handy thing to have, doesn’t weigh much, and is decently compact (when in your bag, quite bulky on the outlet). Again, I would have kept living life without it but at $11.60 it is hard to go wrong.
UPDATED: You can only charge one iPhone at a time (I am told), and you cannot charge an iPad, off the USB ports.
∞

Updated. Amazon in late September launched new Kindle devices including Kindle Fire, a tablet that makes content a centerpiece of its tablet strategy. It also announced a new browser, Amazon Silk, that proposed to use cloud to offer a blazing fast experience. Silk’s hybrid browser architecture quickly triggered some privacy concerns. Amazon weighed in on my queries and clarified their position.

Nevertheless, I have continued to receive feedback, some private and some over various social networks. One that stands out is from MathewMatthew Prince, co-founder and CEO of CloudFlare, a hosted proxy service provider based in San Diego San Francisco who shared his thoughts. Prince, (you can follow him on Twitter @eastdakota) who teaches cyber law at John Marshall where he serves on the Board of the Center for Information Technology & Privacy Law, believes Amazon will continue to face “technical, legal, and privacy concerns with Silk.” He points out that similar attempts in the past have not been very successful, even for Google.

Amazon’s Silk Browser may be a game changer, but the history of similar efforts shows the company may face significant headaches in getting it to work. The Silk Browser loads pages through a proxy which can have a number of benefits to end users. Depending on how aggressive the Silk proxy is, it could speed up browser performance, allow Kindle devices to get away with slower, less expensive processors, and potentially even increase the battery life by offloading web rendering.

The Silk Browser it isn’t really new technology and it’s not a slam dunk that it will work. The Opera Mini browser uses a proxy which has several of the same features as Amazon’s Silk. Google tried something similar back in 2005 with their Web Accelerator Plugin. While the plugin is no longer available, the support documents still are. Google discontinued support in early 2008 after a number of issues arose — similar issues that are likely to be faced by Amazon with Silk.

I predict that Amazon is likely to face technical, legal, and privacy concerns with Silk. Technically, the biggest challenge will likely be cache invalidation. If I visit my bank website and my account page is cached, Amazon needs to be 100 percent certain that when someone else visits the same bank they never see my account information. From the technical specifications, it appears that Amazon is only caching static resources such as images. While that will solve many of the cases, there will still be places that Silk could end up leaking private data (e.g., a stock photo or porn site that charges for access to its photos).

Unlike existing proxies (like CloudFlare) or traditional CDNs whose clients are the website owners, Amazon’s clients are the web browsers, so they are copying content without the content owners’ explicit permission. This could lead to copyright headaches. While there are safe harbors for service providers caching content, Amazon’s nebulous status between network provider, retailer, and even publisher could muddle their case in court and make them a tempting target. The more Amazon alters the content in order to increase performance, the more jeopardy they will put themselves in.

Finally, Silk potentially puts Amazon in the privacy crosshairs. It appears they are planning to subsidize some of the Kindle’s pricing with advertising, and that advertising will likely be most effective if it is targeted using browsing data gleaned from Silk. Users and regulators can react very strongly if they feel their information is being sold without their permission, and Silk has the potential to score high on the creepiness factor. These privacy concerns have a way of blowing up unexpectedly with regulators resulting in substantially burdensome regulation. In this case, Amazon has already made many government enemies as they’ve fought Internet sales tax initiatives. Going after them for privacy violations may prove a tempting target for lobbyists that [are] already trying to demonize them.

My hunch is that Amazon will find a way to pull it off, but it won’t entirely be smooth for Silk.

What do you think about Prince’s take?

Related research and analysis from GigaOM Pro:Subscriber content. Sign up for a free trial.
Connected Consumer Q3: Netflix fumbles; Kindle Fire shinesDisruptapalooza 2011: how Amazon’s Kindle is changing the portable media gameWhat Amazon’s new Kindle line means for Apple, Netflix and online media

Netflix came under a lot of heat last month when it announced that it would be separating its DVD service from the rest of its operations and renaming the business Qwikster. So now, after hearing more or less unanimous disapproval from users, analysts and investors, the company has decided to backtrack on those plans, and will keep DVD-by-mail a part of the Netflix brand and website.

Months of missteps
The debacle first began way back in July, when Netflix announced a change to its pricing that separated its $9.99 DVD and streaming plan into two services that cost $7.99 each. That led to an effective price increase of 60 percent for users that planned to continue subscribing to both services, which was met by wide-scale disapproval.

After announcing an update to its customer forecast, which lowered its expected subscriber count by a million at the end of the third quarter, Netflix CEO Reed Hastings then apologized and announced that the company was spinning out its DVD service as a standalone business and re-naming it Qwikster. That would mean a whole different website, billing relationship and ratings system for customers. The Qwikster plans made Netflix’s situation even worse, leading to even more customer unrest. (Not to mention ridicule by late-night comedians like Conan O’Brien.)

A step back, and an apology
Netflix is now announcing that it will not go through with those plans after all, and that it will continue to have a combined streaming and DVD-by-mail service and offer those services both through Netflix.com. Users will continue to have one monthly bill, and their ratings and recommendations will carry over between the services as they always have.

The move is a concession to those who questioned the wisdom of Netflix’s recent plans, but also an acknowledgment that the company harmed its brand and relationship with users through poor communication and an apparent disregard for what customers actually liked about the bundled service: simplicity. By splitting the services and brands, Netflix added an unnecessary layer of complexity to using both DVD-by-mail and streaming. CEO Reed Hastings admitted as much in his statement issued with the press release:

“Consumers value the simplicity Netflix has always offered and we respect that,” said Netflix co-founder and CEO Reed Hastings. “There is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.”

But is damage already done?
While most of Netflix’s recent problems have been self-inflicted, competitors are hoping to take advantage of customer disapproval of the announcements made over the past few months. Dish Network, for instance, unveiled a new streaming and DVD-by-mail offering called Blockbuster Movie Pass that it’s making available to its pay TV subscribers for an additional $10 a month. Amazon has doubled the number of streaming titles available for its Prime Instant Videos subscription service, and will likely see an uptick in video users once its new Kindle Fire tablet becomes available. And Hulu has been talking up its subscription service, saying that it expects sales from Hulu Plus will make up about half its revenues in a year.

Will Netflix’s decision to halt its Qwikster plans win back customers or get them to stick with the service? Or has the damage already been done, and will they look for alternative services elsewhere? Let us know what you think in the comments!

Related research and analysis from GigaOM Pro:Subscriber content. Sign up for a free trial.
What Amazon’s new Kindle line means for Apple, Netflix and online mediaConnected Consumer Q2: Digital music meets the cloud; e-book growth explodesA 2011 Connected Consumer Forecast

Steve Jobs’s death has prompted Simon & Schuster to move up the publication date for his much-anticipated biography by Walter Issacson. The CBS-owned publishing unit has moved up the release date for “Steve Jobs” from Nov. 21 to Oct. 24. Not surprisingly, preorders for the book are skyrocketing, and the title now tops bestseller lists at both Amazon and Apple’s iTunes.

The Kindle Fire appears to have catalyzed yet another tablet sale: the HTC Flyer will drop to $299 at Best Buy starting October 1, with no end to the sale in sight. This is the second big-name tablet that appears to be re-centering itself around the Kindle Fire's $199 price point.

Over the last couple of weeks, the BlackBerry PlayBook’s price slid down to a starting price of $299, $200 less than it initially retailed for at launch. The HTC Flyer, which is a 7-inch tablet like the PlayBook, will be getting the same discount. Meanwhile, the 10-inch 4G-capable HTC Jetstream is holding strong at $699.99 for a 32GB model.

Neither the PlayBook nor the HTC Flyer found much popularity while occupying the same price point as the iPad. The HTC Flyer has a 1.5GHz single-core processor and it’s still running a version of Android that isn’t designed for tablets (2.3 Gingerbread), though it is overlaid with HTC ’s Sense UX. The Flyer’s internal 16GB of storage can’t be expanded, but it does have a respectable set of cameras (1.3-megapixel on the front and 5-megapixel on the back) and comes with a stylus.

Best Buy is calling $299.99 the “permanent lower price” of the HTC Flyer, and it will apply both in-store and online. We’re a little thrilled that a company has finally set off a tablet pricing war, but these discounts may still not be enough to get back all the limelight the Kindle Fire has stolen.




Read the comments on this post

Amazon’s Kindle Fire won’t ship until Nov. 15, but already it’s the retailer’s top-selling gadget. Buoyed by a surge of preorders, the $199 upstart tablet is No. 1 on Amazon’s list of the 100 most popular electronics items. Numbers two through 10? All Kindles in different configurations.

Amazon’s Kindle Fire is what everyone expected: A small tablet, mostly for consuming media, watching video, playing games, reading Kindle e-books, browsing the web, and goofing around in apps. It is also cheaper than expected, at $199 — less than half the price of Apple’s iPad.

There are some nice touches, like the “Silk” web browser, which does some of the page-crunching in the cloud, so web pages should theoretically load faster. And the software actually looks decent. Amazon isn’t screwing around.

So: How big of a threat is the Kindle Fire to the iPad?

I don’t see the Kindle Fire significantly disrupting Apple’s iPad business. I think both devices will sell well, and can easily coexist. I don’t think Apple will have any trouble finding iPad buyers, and I think the $199 price tag will attract many people to the Kindle Fire.

For now, the Kindle Fire isn’t as useful of a device — it’s a simple entertainment pad, whereas the iPad is already shaping up as the PC of the future. They will probably attract different buyers, and right now, the market is so small and nascent that there is easily room for both of them. Some people may buy a Kindle Fire instead of an iPad, but many others will want the richer iPad experience, and some may buy both and use them for different things.

Looking forward, we’ll have to see how much Amazon can do with the Kindle Fire software platform — both the OS and app ecosystem — and how tablet pricing shakes out.

My hunch is that Apple will remain well ahead of Amazon in software, hardware, and ecosystem, and therefore the iPad will continue to be the “premium” tablet indefinitely. Amazon may help force Apple to lower entry-level iPad prices, and Apple may even have to make a smaller iPad someday. But Amazon is not likely to take over Apple’s spot at the top of the tablet market.

Bottom line: The Kindle Fire isn’t much of an iPad threat yet. The real trouble will be for companies like Barnes & Noble, RIM, and Samsung, which are trying to sell 7-inch tablets that either cost considerably more or have poorer content and apps ecosystems.

Also: 500 days with the iPad

One year ago, almost to the day, Jeff Bezos gave me the reason why people should carry around a Kindle in the age of the iPad. No Angry Birds.

“The number one app for the iPad when I checked a couple of days ago was called Angry Birds — a game where you throw birds at pigs and they blow up,” Bezos told me in September 2010. “The number one thing on the Kindle is Stieg Larsson. It’s a different audience. We’re designing for people who want to read.”

Today at a New York City press event Amazon is releasing a $199 color 7-inch tablet device called Fire. It plays Angry Birds.

“Nobody is expecting that we’re coming out with a $79 Kindle!” –Jeff Bezos
No, Amazon is not giving up on people who mainly want to read. Bezos also unveiled a new e-book reader called the Kindle Touch. It uses the same high-density “pearl” e-ink as the previous Kindle, but you can swipe your finger on the page to turn the screen, type on an on-screen keyboard that otherwise slumbers while you snuggle in with Jennifer Egan or Neal Stephenson. It costs $149 with Amazon Whispernet mobile connectivity and only $99 for the Wi-Fi version. They ship on Nov. 21.

There’s also a new Kindle where you turn pages with the traditional side buttons. It’s slimmer and lighter — under six ounces — because there’s no physical keyboard. It costs only $79, and is available now. Bezos can’t contain his excitement at this. “At $79, it’s really going to blow people away,” Bezos told me in Seattle last week when he shared a glimpse of his new line of devices. “Nobody is expecting that we’re coming out with a $79 Kindle!”

All the new e-ink Kindles have an innovative feature called X-Ray. When you download a book on an e-ink Kindle you automatically receive a second file with information about the characters and settings of the book. The sources include Wikipedia and an Amazon-owned company book-related social service called Shelfari. It’s a welcome means to quickly figure out whether an unfamiliar character had appeared a few chapters earlier.

But Fire is the hottest of the bunch, because it marks Amazon’s media assault on the sizzling category of tablet computing. Ever since Steve Jobs introduced the iPad, a slew of competitors ranging from HP to Samsung have tried to come up with their own tablets. It’s been like the Charge of the Light Brigade as one after another get sent out to the slaughter. None of them are as good as the iPad and they generally cost as much or more.

With a groundbreakingly cheap, small, even simpler tablet — and a powerful inventory of books, movies, television shows and digital tunes to fire up — Amazon is a more formidable foe. Its goal is not selling hardware, but selling the media that runs on the device. Amazon, he says, now has a $15 billion media business — most recently it inked a deal with Fox for movies and television shows. “It’s not just books,” he says. “It’s music, games, software, it’s a bunch of different things.” Now it has a platform to play those songs, games, and apps.

Bezos sees the Fire as a machine that could make Amazon’s media services — some of which have lagged behind those of Apple, Netflix and others — as powerful as the Kindle has made it in books. The elements of Fire, he says, involve many services that Amazon has built in its 15-year history. Besides media, Fire involves its popular $79-a-year Amazon Prime service that allows customers free shipping, and the company’s quietly powerful Amazon Web Services infrastructure, which does computing for a huge number of internet companies, including even its competitor Netflix.

As with the Kindle, the Fire is not a shiny trigger for technolust. And it lacks some of the features of the iPad and other tablets. No camera. No GPS. Not even 3G. And only 8 gigabytes of storage.

But it is designed to do its job very well. Bezos insists that people not see Fire as a standalone device, but part of an integrated media service. “That’s why the Kindle has been successful,” he says. Like the original Kindle, the Fire arrives knowing who you are by your Amazon account — you’re ready to buy stuff. Weighing 14.6 ounces, it’s the size of a DVD case, and its seven-inch LCD screen shows movies sharply. It’s powered by a dual-core TI OMAP 4 chip. If you are one of millions who belong to Amazon Prime, you can stream from the reasonable if not totally satisfying (11,000 videos) collection of movies and TV shows for free. (Fire purchasers who are not Prime members get a one-month free tryout.) New software organizes music, which you can buy or upload to Amazon via its cloud music service.

Bezos takes special pride in the Fire’s speedy web browser, dubbed “Silk” because that substance is almost invisible yet really strong. The Fire uses a home-grown technology called “split browsing.” Because of Amazon’s advanced data centers, the company can handle some of the heavy digital lifting on time-consuming processes like loading web pages — before it sends the data off to the device itself. It gets a further boost because many popular sites use Amazon’s cloud services, allowing for greater efficiency. This enables Silk to run much faster than other tablet browsers.

Oh, and it also runs Flash. Take that, iPad.

Of course, because Fire runs on a modified version of the Android mobile operating system, Amazon has access to thousands of apps. Even though Amazon has made Fire simpler to use, it has taken care to make sure that you’ll have your Angry Birds.

“You can think of Android in two pieces,” says Bezos, citing what the user sees and what the developer has to deal with. “Android is simpler and easier to use in terms of user interface,” he says. “But our goal is to keep Android easy for developers — if they write an app, we’re going to work hard to make sure it’ll run on this device, but we’re going to — on the consumer-facing piece, you know — we’re starting with Android and making it simpler.”

Clearly Amazon is betting that there’s a big market for people who want tablets mostly for media and browsing — and don’t want to pay $500. But even if the Fire doesn’t give iPad a hotfoot, it will probably have a big impact on Amazon’s other competitors. Barnes and Noble, which had been feeling good about how recent versions of the Nook were arguably slicker than the now-outdated Kindles, is now outflanked by a more versatile color device and a very affordable e-reader.

Possibly the biggest loser today is not Apple, but Netflix. Just as its customers are outraged at higher pricing of Netflix streaming (and furious that the DVD business has been offloaded to a new subsidiary), here’s Amazon offering a nifty device with an even better price: $79 a year. And there are millions of people who pay for Amazon Prime who don’t even know they’re getting free video streaming. If Amazon builds up the inventory — and it certainly has the bucks and the clout to do this — it will be the logical place for disaffected Netflixsters to land after storming out of Reed Hastings’ house in a huff.

Still the introduction of Fire — which will ship November 15 — introduces a contradiction. For years, Bezos has been touting the virtues of e-ink for reading. Now he is introducing the first in what will probably be many back-lit, heavier Amazon devices. Which gadget will people choose?

Bezos has an answer. “They’re going to buy both,” he says.

But if that happens, who will stop playing Angry Birds long enough to read a book on the Kindle?

Top photo: Victor J. Blue/Wired.com.

See Also:

Rumor: Amazon Gunning for a Tablet Release This Fall
Amazon Tablet to Launch ‘By October’
From HP to Amazon, the Tablet Dilemma: Go Big or Go Home
Report: The Kindle Tablet Exists, And It’s a Big Deal

While most of the attention surrounding Amazon’s about-to-be-introduced tablet is around its feature set, it will also be interesting to see if the device raises any patent issues.

Oracle, Microsoft and Apple have all sued over Android, albeit in different ways. Oracle has sued Google directly, while Microsoft and Apple have sued particular hardware makers.

Microsoft and Apple both declined to comment ahead of any product introduction by Amazon. However, Microsoft’s deal with Samsung — and its related comments — reiterate the company’s position that it believes it is owed royalty revenue on each Android device sold.

Also, Microsoft and Amazon do have a patent deal covering the existing Kindle line and Amazon’s Linux-based servers.

The devil, of course, is in the details of just how Amazon does and doesn’t use Android. And there is always the question of what deals might quietly be in place, and which relevant patents Amazon might hold that it can claim are being infringed by any potential litigant.

Amazon and book publishers' stupid attempts to curtail e-book lending.

This goes against everything that this site is for but sadly, Amazon gets no flak for this at all in the Twitterverse or in the open-source community compared to another fruit company they love to hate.

The coming battle between Apple and Amazon will occur on many fronts, but place where Apple can really hurt Amazon is on pricing. Just as Apple initially did with 99-cent songs on iTunes, Amazon imposed a uniform $9.99 price on bestsellers in the Kindle Store. A single price helps to establish markets for new product categories, especially when that price is at a discount to the physical alternative.

Leaving aside the moral, philosophical, cultural and financial implications of this weekend’s Amazon/Macmillan slapfight and What It All Means for book readers and the future of the publishing industry, in one very real sense the whole thing was an exercise in public communications, a process by which two very large companies made a case for themselves in the public arena. And in this respect, we can say this much without qualification: oh, sweet Jesus, did Amazon ever hump the bunk.

All that said, the real story here isn't the hardware, for at the end of the day, Amazon doesn't care about the hardware that much. What it wants to do is sell e-books, which don't take up warehouse space, require trucks to be delivered, or an expensive customer service team to support. And it wants to sell lots of them.

Here’s a riddle: How do you make your book a best seller on the Kindle?

Answer: Give copies away.

Amazon breaks the DRM shackles and promises to give iTunes a run for their money.