TechFlash: Seattle's Technology News

Jeff Bezos launched the Kindle Fire to compete with iPad (Portfolio/J.D. Harrison)

After seeing its sales soar but profits erode, Amazon faces challenges in 2012 that include the potential disappearance of the sales tax loophole it enjoys in most of the country and the need to reassure skeptical investors that it has a handle on its costs.

Amazon posted record revenue in 2011, and the Seattle e-commerce juggernaut made major moves to expand its empire — from launching its Kindle Fire tablet to expanding its publishing division. The company also spent hundreds of millions of dollars to open more warehouses across the U.S.

The growth has been felt widely, in Seattle and beyond, from its appetite for commercial real estate to its impact on competitors.

Amazon was also at the center of debate this year in Congress, which has been grappling with federal legislation to address an online sales tax collection issue that has flared up in several states where Amazon does online retail business. The Seattle company supports a proposed national law that would force online retailers to collect local taxes on more of their sales.

Related TechFlash coverage: Sen. Cantwell seeks online piracy law seen as less harsh by tech firms

Amazon, Google and Facebook are so up-in-arms over federal anti-piracy legislation that the tech companies are considering boycotting the internet. It would be an attention-grabbing ‘nuclear option’ protest that could block traffic to some of the biggest online sites.

The tech companies are angry about the Protect IP Act in the Senate and a house version called the Stop Online Piracy Act. The legislation, aimed at stopping online piracy of music and video, has the backing of the music, film and television industries. Opponents include tech companies such as Google, Yahoo and eBay. The companies worry the law will allow the government to overreach and harm free speech and free commerce.

Many small businesses plan on buying tablets in 2012, primarily Apple's iPad.

About three-quarters of small businesses plan to buy a tablet computer in the next 12 months, with most saying that they are likely to choose Apple's iPad.

That is the finding of a new report from NPD Group released on Thursday. NPD said that the number of businesses that plan to buy tablets increased to 73 percent, up from 68 percent in a second-quarter survey.

It found that 90 percent of the firms surveyed expect to spend the same amount or more on tablets over the next 12 months.

Amazon's Kindle Fire has been in hot demand during the holidays

Amazon CEO Jeff Bezos took center stage in New York in September to announce the Seattle e-commerce giant’s long-awaited tablet to provide some serious competition to Apple’s iPad, which has enjoyed free run of the tablet market.

The new Kindle Fire was voted the story of the year by readers of TechFlash as part of our 2011 TechFlash Newsmaker Awards, or Flashies.

To compete with Apple’s iPad, Amazon has aggressively priced the red hot Kindle Fire. The $199 price tag is less than half of the $499 iPad price -- and $50 less than it costs to develop each tablet, according to analysts.

Analysts have raised questions about the strategy.

BUSINESS JOURNAL PHOTO | Anthony Bolante

Amazon.com employees are flooding Seattle’s transformed South Lake Union neighborhood. Among the new urban amenities is this sidewalk art on Terry Avenue. Developers, anticipating demand, continue to plan new office buildings for the district.

South Lake Union will remain a hot spot for commercial development in 2012, while Pioneer Square may emerge as Seattle’s next emerging neighborhood.

Amazon.com continues to drive much of the development in the city’s South Lake Union area, which has changed dramatically in recent years because of new construction.

Pioneer Square, the city’s original business district, is seeing an influx of start-up companies, with some residential and commercial developments in the wings that could bring more residents and workers to the district.

Are smaller, Kindle Fire-sized iPads next?

The latest report from Apple’s Asian suppliers is that the company will introduce two new versions of its iPad late in January and will cut the price of its current iPad 2 in an effort to compete with Amazon’s Kindle Fire.

Taiwan-based Digitimes cited unnamed Apple suppliers in its report that said the new iPads will have higher-resolution screens, brighter panels, faster processors and better cameras.

It also said that Apple will take on Amazon’s $199 Kindle Fire with a price cut on its iPad 2 that now starts at $499.

Lockerz founder Kathy Savitt accepts her "Flashie" at the third annual TechFlash Newsmaker Awards at EMP Dec. 1. (Photo by Stephen Brashear)

Kathy Savitt, a former Amazon.com public-relations executive who started her own company and raised $36 million this year, narrowly beat her former boss, Jeff Bezos, to win TechFlash Newsmaker of the Year for 2011.

Lockerz, a Seattle startup backed by Kleiner Perkins Caufield & Byers and Liberty Media, is a members-only network of “trendsetters and tastemakers who like to shop, play and connect on the Web.” The company has more than 45 million monthly unique visitors worldwide.

Portfolio/J.D. Harrison

Amazon CEO Jeff Bezos is happy how well the Kindle Fire is selling.

Amazon is selling a heck of a lot of Kindle devices. And Jeff Bezos is mighty happy about it.

Amazon rolled out some numbers to crow about Kindle sales during the holiday season, saying that it has sold more than 1 million Kindle e-readers and tablets per week in December.

“We are grateful to our customers worldwide for making this the best holiday ever for Kindle,” said Bezos, Amazon.com founder and CEO. “And in a huge milestone for independent publishing, we’d also like to congratulate Darcie Chan, the author of ‘The Mill River Recluse,’ and Chris Culver, the author of ‘The Abbey,’ for writing two of the best-selling Kindle books of the year.”

M-Edge image

M-Edge’s travel jacket for Kindle Fire

A Maryland company that makes covers for Kindle Fire and other tablets is suing Amazon.com, saying the e-commerce giant is trying to put the tiny startup out of business.

M-Edge Accessories has filed a lawsuit in federal court in Maryland saying Amazon played hardball to squeeze more commission out of the company.

The suit offers a glimpse at Amazon’s relationship with one of its third-party merchants, a group of companies that sell products on Amazon.com and turn over a percentage of sales to Amazon.

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Online holiday shoppers kept the pedal to the metal straight through Christmas this year, pushing season-to-date spending to a record $35.3 billion, according to online metrics firm comScore. That level of spending from November 1 through December 26 is 15 percent higher than during the same period last year.

“Holiday e-commerce spending has remained strong throughout the season, and we have now reached a record $35 billion in U.S. online sales for the season-to-date,” said comScore Chairman Gian Gulgoini. “We can now say with certainty that the $1.25 billion spent on Cyber Monday will rank it as the heaviest online spending day of the season for the second consecutive year, but we should also note that it was accompanied by nine other billion-dollar spending days this year.”

ForeSee chart

Amazon is at the top of the heap, but Netflix has slipped, according to a survey that measures online shopping satisfaction.

Amazon retained the top spot in the annual survey measuring online buying satisfaction conducted by analytics firm ForeSee.

Results of Kelkoo survey that shows extent of “boozy shopping” in Britain

First there was drinking and driving. Then came drinking and dialing. And now drinking and buying?

More consumers may be going online and shopping after having an alcoholic drink or three.

Some online retailers see a consumer pattern of buying later in the evening and are adjusting their marketing accordingly. Some online shoppers say they would never go into a store after drinking but have no problems shopping online after tipping a few. Which would explain how some used CDs bought on Amazon ended up in one shopper’s mailbox.

The New York Times reports that as internet sales have grown, so too has the opportunity for inebriated online shoppers to spend more freely.

Amazon’s huge cloud buildup has resulted in the Seattle company creating one of the world’s fastest supercomputers – sort of.

According to Wired magazine, Amazon created a virtual supercomputer on its Elastic Compute Cloud (EC2), which ranked 42^nd fastest in the world. But what’s different is that Amazon’s “supercomputer” isn’t a single group of computers in one location – it is spread out over the globe.

Office of U.S. Senator Maria Cantwell

Maria Cantwell's net worth of $6.16 million ranks her 34th among senators.

By any other standard, Maria Cantwell’s millions would put her in the top bracket of the wealthy.

But in the U.S. Senate, Cantwell -- an early employee of Seattle tech company RealNetworks -- is just a middling millionaire, ranked 34th among fellow senators.

Sen. Cantwell (D-Wash.) is worth $6.16 million according to a chart published online by The Washington Post.

Washington’s other U.S. Senator and fellow Democrat, Patty Murray, is ranked 83rd, with a net worth of $917,000, according to The Post.

Is Amazon.com guessing customers’ religions based upon the gift wrap paper they select?

In addition to sending customers targeted product information based upon their previous purchases and browsed items, the Seattle online retailer has recently been granted a new patent that could determine a shopper’s religion, based upon the style of gift wrap chosen.

The patent was detailed by Slashdot.

According to a filing with the U.S. Patent and Trademark Office, Amazon says the patent is aimed at “mining of user event data to identify users with common interests.” The patent also seems to describe social media use for the technology, which Amazon describes as a “computer-implemented method of matching users to other users.