Fortune takes a look at Amazon’s next revolution: transform the book business with kindle.

(Fortune Magazine) — On a bright May morning Jeffrey Bezos descended from atop Mount Seattle unto the press corps. He appeared casually on stage in a standing-room-only theater in New York City. Like another messenger of long ago, he carried a tablet. And he said unto the people: “Ladies and gentlemen, I’m excited to introduce Kindle DX.” Keyboards tapped. Shutters clicked. And as the Amazon founder and CEO turned a 9.7-inch display toward the masses, they saw an inscription: The New York Times.
We live in a culture of product lust, in which every new release is hyped and deconstructed, only to be dismissed in favor of the next shiny web-enabled wedge of plastic. But Kindle DX, a large-screen e-reader designed to optimize the presentation of newspapers and textbooks, bears little resemblance to anything else in the gadgeteria. The $489 tablet technically is portable but slides comfortably into no pocket. With all the sex appeal of a bamboo cutting board, it would look more at home in Sur La Table than Best Buy (BBY, Fortune 500). It will impressively download any of the 285,000 e-books available at Amazon.com in less than a minute. But it features a black-and-white display with a crippled web browser, no video, and not even a backlight. It’s a brash example of a single function trumping broad ambition.
Apparently doing one thing well is enough, at least for now. Amid the malaise of the retail sector, Amazon (AMZN, Fortune 500) blew past expectations when it reported 24% year-over-year earnings growth in the first quarter. A key driver was Kindle DX’s predecessor, Kindle 2, a $359 device that made its debut in February. As consumers everywhere curtailed spending, Kindle 2 was flying off Amazon’s virtual shelves. “Kindle sales have exceeded our most optimistic expectations,” Bezos declared at the time.
And now, in rapid-fire succession, the company has unveiled Kindle DX to greater expectations still. While newspapers have always been part of the Kindle playbook, Kindle 2 presents content on a display roughly the size of a paperback. The large-screen DX is designed to favor the type of graphics-heavy presentation found in college textbooks. Thanks to an accelerometer, the display can also be viewed sideways, broadsheet-style. Which means that packed inside the device is a burden so large that one can hardly imagine it fitting within a 10.4-by-7.2-by-0.38-inch frame. It’s meant to be a savior.
The device has been called the iPod of reading, but unlike Apple’s music player, the new Kindle has been met less with lust and awe than with hope and wonder. Could this rather plain-looking and pricey gadget actually pull off something so monumental as reversing the slide in book publishing and saving newspapers? Um, maybe?
***
In the comfort of Seattle headquarters a week after the DX event, Bezos is surrounded by handlers who mind his clock, police his conversation, fetch water, and signal to him from the far side of the room. Dressed in jeans and an oxford shirt, he’s genial and conversational but religiously on message. Even his famous projectile guffaw seems premeditated, a human laugh track inserted to denote intended levity.
Kindle is sometimes referred to as an e-book reader. But that’s a bit of a misnomer, because even the original Kindle (which now looks clunkier than a first-gen iPod) was designed with all types of long-form narrative in mind. Newspaper subscriptions were available at launch (editorial content is delivered every morning by four for a monthly fee of up to $14.99), and they quickly rose to the top of the bestseller list, where they remain today.
The willingness of Kindle owners to purchase daily content should be an obvious lesson - the business is news, not paper - and further expose the foolishness of giving everything away on the web. “I don’t want to oversimplify what’s happening in media. It’s very complicated,” says Bezos. “But I find it hard to believe that the primary way of reading newspapers 10-plus years from now is going to be on printed paper.”
What’s Amazon’s interest in hastening the move to digital? “The math is compelling,” he says. “There is a genuine opportunity to make the cost structure of printing and distribution much more attractive.”

