TIME Companies

Amazon’s Dispute With Hachette Might Finally Be Hurting Its Sales

The book industry nurtured Amazon's growth. Now the online retailer's war against publishers is a thorn in its side

The book business launched Amazon to success, and now it’s hurting the online retailer’s growth.

Amazon announced its worst quarterly loss in 14 years Thursday, losing $437 million in three months. One of its worst-performing segments? Amazon’s old core business: North American book, movie and music sales. The segment’s sales increased a mere 4.8% from 2013, the slowest growth for the category in more than five years. That compares with a 17.8% growth in that segment a year ago.

Amazon chalked up the slow media segment growth to fewer students buying textbooks, but that doesn’t seem to be the whole story. In fact, the company’s woes may in part be related to its damaging publicity spat with the publisher Hachette.

Here’s a quick recap of what happened: earlier this year, Amazon demanded Hachette give up a larger cut of its book sales; Hachette demurred. Amazon then increased shipping times on Hachette books, raised Hachette book prices, and redirected customers to other publishers on its website. Hachette, determined to hold its ground, rallied authors to its side. In August, 900 authors, including Stephen King, Malcolm Gladwell, Barbara Kingsolver, Jane Smiley, John Grisham and James Patterson, signed a letter to Amazon defending Hachette, accusing Hachette of “selective retaliation” against writers.

There isn’t much visibility into what’s going behind closed doors and in sealed accounting documents at Amazon, but by targeting Hachette, Amazon is making it harder to buy the retailer’s own books. A customer deterred by an artificially long shipping time on a Hachette book is a sale lost. For a huge company like Amazon, that may be little more than a self-inflicted scratch, but it’s likely making difference.

And more importantly for the online retailer over the long term, the dispute may be hurting Amazon’s image and turning customers away. For book readers who love particular authors, it’s hard to forget when a bookstore is accused of having “directly targeted” a favorite writer. A literary-inclined crowd, already more likely to side with the letters people than the money people, may see the Hachette dispute as a turning point. “It’s logical that readers identify more with authors than with Amazon,” says Colin Gillis of BGC Financial. “Amazon is a service. You may like the service but you build a relationship with authors.” If book lovers ultimately decide that Amazon is bad for authors, Amazon could lose its hold on the very business that nurtured its growth.

 

 

TIME Smartphones

4 Reasons Amazon’s Fire Phone Was a Flop

German Launch For Amazon's Fire Smartphone
A man holds the new Fire smartphone by Amazon.com Inc. during demonstration at a a news conference in Berlin, Germany, on Monday, Sept. 8, 2014. Bloomberg—Bloomberg via Getty Images

Amazon still has $83 million worth of unsold units

Amazon’s ongoing expansion into more and more product categories has finally hit a big speed bump. The Fire Phone, Amazon’s recently launched smartphone, was supposed to compete with high-end devices like Apple’s iPhone and the Samsung Galaxy. But consumers apparently didn’t bite—Amazon was forced to take a $170 million writedown charge on costs related to the device, it was revealed Thursday. Meanwhile, the company reportedly has $83 million worth of unsold Fire Phones still in its inventory.

While CEO Jeff Bezos is likely surprised that the Fire Phone hasn’t flown off Amazon’s virtual shelves, the device’s lack of appeal was obvious to many outside observers. Here are four reasons Amazon’s Fire Phone was doomed from the start:

Too Expensive

Amazon has a history of undercutting competitors on everything from tablets to balsamic vinegar. So it came as somewhat of a surprise when the Fire Phone launched at $199 with a two-year wireless contract, essentially the same price as the iPhone and Samsung Galaxy. The high price didn’t help incentivize iPhone and Galaxy owners to abandon their devices, which is what Amazon needed to happen for the Fire Phone to gain quick traction. The company saw the error of its ways relatively quickly and dropped the phone’s price to 99 cents in September, but that hasn’t been enough to turn things around.

Small App Store

Though Amazon’s devices run on Android, they use a proprietary app store tailor-made for the company’s phones and tablets. That means developers have to make different versions of their apps specifically for the Fire Phone and Kindle Fire, and many haven’t bothered. Amazon’s app store has about 240,000 apps, compared to more than 1 million in the Google Play store. Most notably, Amazon’s store lacks Google’s flagship apps, so Fire Phone owners have no easy access to Gmail, YouTube or Google Maps. Other popular services, like Dropbox, are also absent. Users can sideload Android apps onto the Fire Phone, but it’s a more cumbersome process that might be beyond the technical prowess of some Amazon fans who are used to the simplicity of devices like the Kindle e-reader.

Late to Market

The Fire Phone was a classic case of “too little, too late.” Apple is on its eighth generation of iPhones, and Android devices have been around nearly as long. Smartphones now account for 72 percent of the overall mobile market in the U.S., according to Comscore. Amazon would probably have the most luck convincing first-time smartphone buyers who have yet to develop a device preference to pick up a Fire Phone, but there simply aren’t many of those people left.

Features of Limited Interest

Many of the Fire Phone’s most innovative features, like the ability to scan 100 million real-world objects with the press of a button, are really aimed at getting customers to buy more things on Amazon. Making such features the main selling point of the device immediately means its appeal will be limited to only heavy Amazon users. Other new features, like the 3D display, were generally met with a collective yawn. The iPhone 6’s most prominent new feature, meanwhile — its big screen — is a more obvious upgrade, and its own commerce-focused perk, Apple Pay, works at plenty of places outside Apple’s ecosystem.

Overall, Amazon’s ambitious device simply doesn’t have a defining quality that would compel the average consumer to run out and buy it. We’ve all made it this far in life with perfectly suitable smartphones, and there already myriad ways to buy stuff on Amazon. The Fire Phone is solving problems that nobody had in the first place.

TIME Companies

Get an Inside Look at Amazon’s Massive Fulfillment Centers

Ordering holiday gifts on Amazon seems so simple. Ever wonder what happens between when you click "Checkout" and the items arrive at your door?

TIME Companies

Nike CEO Hints at Apple Collaboration

The athletic brand and tech giant may come together in the near future

For those looking for wearable tech that’s significantly less nerdy than Google Glass and the Apple Watch, you may not be looking for long.

TIME Apple

Apple Just Passed a Massive Milestone

Consumers Shop At An Apple Inc. Store Ahead Of Earnings Figures
Michael Nagle—Bloomberg/Getty Images

The news of its massive quarter has finally settled in

It took a few days, but Apple’s blow-out quarterly earnings report — driven by strong iPhone and Mac sales and bolstered by the largest stock repurchase program in the history of capitalism — has finally made its way through Wall Street’s algorithms and into Apple’s share price.

The stock closed Thursday at $104.83, up 1.8% for the day, 7.2% for the week and 50% from April 2013, the cruelest month, when it dipped into the high 300s.

Speculators who bought a lot of calls in September 2012, when Apple was approaching an intraday high of $705.07 ($100.72 post-split), will never get their money back.

But investors who held on to their shares through the rout of 2012 and 2013 are back in the green.

Apple is now not only the world’s most valuable public company, but it has left the nearest contenders in the dust. The top four market caps:

Apple: $617.9 billion
Exxon: $401.4 billion
Microsoft $371.0 billion
Google $369.0 billion

TIME Social Media

Facebook Launches Anonymous Chat App Called ‘Rooms’

Rooms Facebook

The app allows people to form invite-only chat rooms based on common interests

Facebook launched Thursday an anonymous chat room app called Rooms, the latest creation to emerge from the company’s initiative to design more apps connecting people in different ways.

The free app, now available in the App Store, allows users to create chat rooms for shared interests, from makeup mastery to city gardens, according to the app’s website. The app is entirely separate from Facebook and doesn’t require you to provide any revealing details like your name or your location.

Chat rooms are invite-only and require a special code that can be scanned with your phone’s camera, according to Facebook. Codes can be shared on social media, e-mail or even posted on paper in public spaces. Chat room creators or other specified moderators can customize the look, ban people from the room or set the room to be 18+.

Rooms’ development was first reported by the New York Times in early October as an alternative way to connect online aside from the many social media networks, like Facebook, which value or require authentic identities as a means of combating spammers, trolls and cyberbullies. However, Facebook’s real name policy has forced out some users, notably members of the LGBT community who prefer to stay anonymous online. A recent flight of transgender users from Facebook to alternative networks like Ello drew headlines several weeks ago.

Rooms joins a host of other secondary apps recently created by Facebook, including Mentions, a Facebook for celebrities and other public figures released in July; Slingshot, a Snapchat-like service released in June; and Paper, a Facebook app simplified for a mobile device released in February.

TIME Healthcare

Need Your Flu Shot? Just Call an Uber

Uber Taxi App In Madrid
In this photo illustration the new smart phone taxi app 'Uber' shows how to select a pick up location next to a taxi lane on October 14, 2014 in Madrid, Spain. Pablo Blazquez Dominguez—Getty Images

The one-day program is available in three U.S. cities

Uber on Thursday launched a one-day pilot program to deliver free flu shots and flu prevention packs in three major U.S. cities.

The UberHEALTH service will be available only Thursday in Boston, New York and Washington, D.C., between 10 a.m. and 3 p.m. ET, according to Uber’s blog. The service can be requested while ordering a ride on the Uber app, after which a registered nurse will administer flu shots and distribute materials for up to 10 people at no additional cost.

The free flu shot service, which is a partner project with Vaccine Finder, is only the latest of Uber’s limited time specials. Uber has previously rolled out delivery services for air conditioners and diapers, and even its own Optimus Prime.

 

TIME Companies

Ad-Free Social Network Ello Gets $5.5 Million in Funding

US-IT-INTERNET-MEDIA-ELLO
The Ello website is seen on the monitor screen September 27, 2014 in Washington D.C. Paul J. Richards—AFP/Getty Images

Company promises it will never sell ads or user data

The burgeoning social network Ello has raised $5.5 million in a new round of venture funding, it was revealed Thursday. The buzzy startup gained widespread attention in September thanks to its manifesto decrying social media companies’ habit of gathering and monetizing user data.

“Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.” the manifesto reads. “We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce and manipulate — but a place to connect, create and celebrate life.”

Ello is putting some legal muscle behind its lofty rhetoric by reincorporating as a public benefit corporation in Delaware. The company will vow in its new legal charter that it will never sell user data or advertising, according to The New York Times. The company plans to make money by charging users for extra, as-yet-unspecified features.

Though Ello has been around since summer, the site exploded in popularity last month after Facebook began kicking drag queens off its site because they were not using their legal names, leading some of those users to relocate to Ello. The small social network leapt from 90 users in early August to more than 1 million today, according to the Times. Facebook has since apologized for how its real name policy affected the LGBT community and others.

The funding round was led by Foundry Group, based in Boulder, Colo.

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TIME

Mark Zuckerberg Gives Q&A in Chinese

"My Chinese is very bad"

Mark Zuckerberg spoke Chinese throughout a Q&A in Beijing Wednesday, barely unable to suppress a smile as murmurs of surprise and excitement rippled through the audience.

The billionaire CEO and social media guru discussed “connecting the world, Internet.org, innovation and the early days of Facebook” at Tsinghua University, where Zuckerberg recently joined the School of Economics and Management Advisory Board, according to his Facebook page.

 

Zuckerberg posted a video of his “first ever public Q&A in Chinese” on his Facebook page. In this clip he self-deprecatingly says, “My Chinese is very bad.”

TIME

Bank of America Issues Refunds to Apple Pay Users

A glitch charged users twice for purchases

Bank of America said it is refunding Apple Pay users who were charged twice for purchases due to a glitch in the system.

Approximately 1,000 transactions were impacted by a BoA app glitch, a bank spokesperson told TIME. Refunds were issued on Wednesday.

Apple launched its new mobile payment service Monday—the latest major expansion of service by the tech giant. With it, customers can use their smartphones in lieu of debit and credit cards at dozens of retailers including Macy’s, Chevron, and Walgreens. Shortly after the launch, Bank of America customers took to social media to gripe about being double charged.

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