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INTERVIEWER: Your goal is to be the largest online-- and you are-- retailer in the world. Beyond that, what's the goal? 

JEFF BEZOS: Well, our mission is Earth's most customer-centric company. 

INTERVIEWER: I don't even know what that means. 

JEFF BEZOS: Well, let me-- I'll give you an example. Right after World War II, Moritasan, the guy who founded Sony, set as the mission for Sony that they were going to make Japan known for quality. And you have to remember, this was a time when Japan was known for cheap copycat products. And Moritasan said-- he didn't say, we're going to make Sony known for quality. He said, we're going to make Japan known for quality. He chose a mission for Sony that was bigger than Sony. 

And when we talk about Earth's most customer-centric company, we have a similar idea in mind. We want other companies to look at Amazon and see us as a standard bearer for obsessive focus on the customer, as opposed to obsessive focus on the competitor. So that's one of the reasons we work on differentiated products. It's one of the reasons we take a long-term viewpoint on things. You can't really do the right thing for customers if you're short-term oriented. 

And if you're going to invent new things, you've also got to be able-- and this goes along with long-term orientation. You've got to be willing to endure a lot of criticism. They're going to put-- Kindle is a good example. If you're going to put your back into reinventing a 500-year-old industry, some folks are going to get ornery. 

INTERVIEWER: It was also feared at one time, those people who had had your stock, that once Walmart, for example, got serious about being online, they were going to blow you away. Why didn't that happen? 

JEFF BEZOS: Well, I think it's because we did a good job for our customers. So we have-- you go back in time, and we've been called Amazon.toast. 

INTERVIEWER: Right, I remember. 

JEFF BEZOS: Amazon.con, Amazon.bomb. This is all, like, in the first three years of our existence. And that's part of what I'm talking about, the willingness to be misunderstood. If you're going to do things, we lay out what we're doing, and we tell people how we think about things. 

I'm saying to people, the iPad is not a Kindle killer. I'm very clear about that. But it doesn't keep people from writing that. And I'm very clear about why. It's a totally differentiated device. It's $139, works in bright sunlight. You can read with one hand, it's so light. And the battery lasts a month. For $139, why wouldn't you want a device like that? 

INTERVIEWER: OK, but let me go back to the Walmart issue, though. What was it that made you able to sustain a challenge from the world's greatest retailer? 

JEFF BEZOS: Obsessive customer focus on-- 

INTERVIEWER: How do you focus on the customer better than they focus on the customer? 

JEFF BEZOS: Well, we, first of all-- 

INTERVIEWER: I mean, they're pretty good at focusing on the customer, too. 

JEFF BEZOS: But we're very differentiated in how we do it. And so our approach, if you think about our retail business, which think is what you're asking about here, the really three things that we know are critical-- 

INTERVIEWER: That's the heart and soul of your business, isn't it? 

JEFF BEZOS: Well, and especially relative to the Walmart question, I think that's the key. It's selection, low prices, and fast, convenient, reliable delivery, so the shipment side. And so we have-- 

INTERVIEWER: Wait, wait, wait. So Walmart doesn't have low prices, fast and convenient delivery? 

JEFF BEZOS: I would claim that Amazon has much broader selection. In many cases-- I don't want to be overly bold in my claim, but the online model gives us significant cost structure advantages that lets us have even lower prices than physical stores. 

INTERVIEWER: Selling online. 

JEFF BEZOS: Well, sometimes they do have an umbrella problem sometimes where they don't want to compete against themselves online versus offline. 

INTERVIEWER: But at Walmart, with all of the volume that it buys, its purchasing power therefore gives it the ability to offer lower prices. Doesn't that give them an advantage they ought to be able to translate? Because their purchasing power is bigger than your purchasing power, is it not? 

JEFF BEZOS: I think in a lot of the product categories, that ship sailed a long time ago. 

INTERVIEWER: Meaning what? 

JEFF BEZOS: Meaning that we have-- 

INTERVIEWER: The purchasing power to compete with anybody. 

JEFF BEZOS: We have the volume relationships with suppliers. That playing field has been leveled. If you'd asked me that question 10 or 15 years ago, I'd have agreed with you-- 

INTERVIEWER: That there was a challenge you had to overcome. 

JEFF BEZOS: But even then, our profitability is not our customers' problem. We don't take the point of view that we're going to price products at a particular margin for ourselves. We say, we're going to price products competitively. And if that means on that product that we lose money, that's OK because we need to take care of the customer and earn trust. And we'll figure out over time. And if we find we can't ever make money with that product, we'll stop selling it. 

But we don't want to-- we're not going to make customers pay for any of our inefficiencies, if you see what I'm saying. 

INTERVIEWER: Did you lose money on the Kindle? 

JEFF BEZOS: Every new business that we have ever invested in, it has taken years. Most businesses have either no impact on our financials for the first five to seven years or a negative impact on our financials for the first five to seven years. And we do a lot of new things. And the company is very healthy financially. We're doing very well. And it's an outcome of customer obsession. 

So when we were Amazon.toast, that was because Barnes and Noble had-- when we were declared Amazon.toast, I think we had 150 employees. Barnes and Noble had 30,000 employees. And somebody wrote an article that said, Amazon has had a great two-year run, but now the big boys have shown up and they're going to steamroll them. 

And we had an all-hands meeting, called all 150 employees together, and I said, look-- because everybody's read it. Every employee has read the Amazon.toast article. Every mother of every employee has read the Amazon.toast article and has called-- 

INTERVIEWER: [INAUDIBLE] father, mother who're living in New York. 

JEFF BEZOS: Are you OK? And so we had an all-hands meeting, and I said, look, you should wake up worried, terrified every morning. But don't be worried about our competitors because they're never going to send us any money anyway. Let's be worried about our customers and stay heads-down focused. 

And so most of these are big markets. Another way to answer your question about competitors and Walmart is I said, look, they can succeed fabulously, and it won't stop us from succeeding. These retail markets are huge. 

So it often doesn't make sense for us to think of it as a pitched battle. Sometimes people think about business as it's kind of like a sporting event. There's a winner and a loser. 

INTERVIEWER: It's not a zero-sum game. 

JEFF BEZOS: It usually isn't. I'm sure there are cases where-- but most often, industries succeed. So I can tell you, I think e-commerce is succeeding. And the way we think about it, nobody else has to fail for us to do well. I think e-books is like that. I think there are going to be many winners. I think e-books is going to be a huge industry. 

INTERVIEWER: Well, there are many competitors now. You've got Barnes and Noble is one of them, and Sony is another now. 

JEFF BEZOS: And they're going to continue to be. And there'll be more. 

INTERVIEWER: Apple is another. 

JEFF BEZOS: But I have a list of 50 competitors that we could walk through all over the world, doing different things. And our focus is going to be, we'll try to pay attention to those competitors, but we're not going to obsess over them. We're going to obsess over readers because those are the people who are buying that device. And we're going to make it-- and it's not just a business for us, it's a mission for us. And missionaries build better products. 

INTERVIEWER: What is Jeff Bezos thinking about today in 2010 that we might not know anything about, that he thinks may be a reality in 2013 or 2015? Where is the-- 

JEFF BEZOS: One of the things is the Amazon Web Services business. Now, there is a business that probably is not-- 

INTERVIEWER: This is Amazon cloud stuff? 

JEFF BEZOS: Yes. And there's a business that's growing. It's in a hypergrowth phase. It's already a significant business. That's a business that probably is not getting as much attention as it deserves. 

INTERVIEWER: [INAUDIBLE] play in the cloud business now? 

JEFF BEZOS: Well, in the infrastructure part of it, which is the part that we play in, Amazon is by far the leader. And it started mostly with startup companies, but now it's big enterprises adopting. 

The best analogy I can give you for this is it's like the electric grid. So instead of-- right now, big companies build their own data centers. And they buy their own servers and they put it in. It's a lot of CapEx. There's a lot of price of admission. If you're going to operate a data center, you have to do it well. 

But it doesn't differentiate you from your competitors. It's just a price of admission. And so what we do at Amazon Web Services is we sell compute by the hour. We sell compute by the drink. It's just like buying electricity off the grid instead of having your own power manufacturing, your own power generating plant.