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Print 13 comment(s) - last by blueboy09.. on Oct 15 at 8:40 PM

No Profit for you! Profits come with content sales not hardware at Amazon.

A lot of technology products and gadgets are sold at breakeven and at times even at a slight loss in order to make money off accessories or services the go along with the products. This is the case with the new Amazon Kindle Fire HD and Paperwhite devices. 
 
"We sell the hardware at our cost, so it is break-even on the hardware," chief executive Jeff Bezos told the BBC.

Bezos notes that Amazon's plan for making money off digital content rather than the devices themselves has worked so far. Bezos says that the user tends to consume more digital media once they own a Kindle or a Fire tablet.
 
"What we find is that when people buy a Kindle they read four times as much as they did before they bought the Kindle."
 
"But they don't stop buying paper books. Kindle owners read four times as much, but they continue to buy both types of books."
Along with these new gadgets, Amazon has also recently announced the roll out its book lending platform in Europe. Users of Kindle devices in the UK, Germany, and France can now access the Kindle Owners Leaning Library.
 
This library allows users to borrow up to one book per month from a selection of titles, some of them very popular titles, at no cost. At launch, the UK service will feature over 200,000 digital books.

Amazon is launching the Fire HD tablet and the Paperwhite eReader in Europe on October 25. 
 

Source: BBC



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Profits? Heh!
By melgross on 10/12/2012 11:32:54 AM , Rating: 2
I doubt they make any money on this. He's very cagy about talking about total costs, rather concentrating on the costs to make statement. He actually refused to say whether they were losing money on the sales.

They only make between 3-5% on content sales, including Kindle books. This is the same amount Apple makes per dollar of sale. It's one reason why Amazon has virtually no profits.




RE: Profits? Heh!
By andrewaggb on 10/12/2012 11:44:56 AM , Rating: 3
yeah its a dangerous game. But if they price them competitive with the ipad they will lose to the ipad and they know it.

And they're probably worried that if apple gains total market share, then apple will systematically take over ebooks, music, movies, maps (cough), search, etc, all in their own time.

Microsoft more or less did it with a fairly open platform that allowed some competition, just imagine what apple will be able to do. Scary stuff. I'm both fascinated and frightened by Apple, MS, Google. Generally google seems less bad, but since people and their information are googles product... I'm not convinced that ultimately there is much difference.


RE: Profits? Heh!
By inperfectdarkness on 10/13/2012 4:46:42 AM , Rating: 5
Google is the totalitarian regime waiting in the wings for the fascist dictatorship of Apple to be deposed.

In all honesty, since the departure of Gates, MS is more like a transparent, conservative democracy--offering utility and service without unwanted intrusiveness.

but that's just my take...


RE: Profits? Heh!
By theapparition on 10/15/2012 9:45:07 AM , Rating: 2
A little melodramatic, don't you think?

Google doesn't care what you do, just as long as they know what you are doing.


Not sure how well that model works
By StanO360 on 10/12/2012 1:41:32 PM , Rating: 2
But they all do it, including Apple. They may be breaking even now, but I'm sure they make money by the end of the life cycle. Remember, he's telling potential customers "you're getting an amazing deal!", anyone that has bought a car knows there is always more to the story than that.




By Ringold on 10/13/2012 5:45:22 PM , Rating: 2
Everyone except Apple does it. Their profit margins on hardware would make even a Saudi oil sheik smile. The appstore is icing on their profit cake. :P


By TakinYourPoints on 10/13/2012 11:28:40 PM , Rating: 2
Apple makes money on hardware, not media. Profit on media isn't there for anyone, Apple included. Everyone pays similar wholesale rates for media and has similar profit splitting with publishers for software. iTunes and the App Store generate less money for Apple than anything else in their portfolio.

Amazon's goal isn't to make money on the hardware, even as the hardware cycle continues since they'll just update to more expensive hardware and continue to drop the price, thus resetting the cycle.

Their goal is the same as other big box retailers, which is to get more customers at razor thin profit margins. It is nothing like the profit margins sought by techs Microsoft, Apple, IBM, Google, etc.

They'll sell media for very little, but more importantly most Kindles are now portable digital billboards for other products that Amazon sells. Why should Amazon limit their advertising to the web and email, now they can do it on your tablet or e-reader as well. If Amazon ever makes a phone, look forward to inexpensive devices that serve ads on the lock screen.


Which side is safer???
By Basilisk on 10/12/2012 10:26:29 AM , Rating: 3
Amazon's KO "Leaning Library" must be larger than Pisa's Tower, so is it leaning to the Left or the Right?




RE: Which side is safer???
By Lord 666 on 10/12/2012 9:41:57 PM , Rating: 2
A tree falls the way it leans. Be careful which way you lean.


heh
By mmarianbv on 10/12/2012 10:05:11 AM , Rating: 3
how can they launch it in europa, when they dont even have it in us ? and they said that us is their top priority

http://www.amazon.com/Kindle-Paperwhite-Touch-ligh...

Expected to ship within 4 to 6 weeks
Due to popular demand, orders placed today are expected to ship in 4 to 6 weeks. Limit two per customer.




Endgame
By edge929 on 10/12/2012 11:19:05 AM , Rating: 1
Apart from being a toy, it's just a gateway to buy things on Amazon.

Step 1: Make it more convenient for users to get to your website
Step 2: ???
Step 3: Profit

They'll make plenty of money from the new Kindles.




RE: Endgame
By TakinYourPoints on 10/13/2012 11:59:53 PM , Rating: 2
It may be a gateway to buy from Amazon but the Kindle e-readers are not toys. The new Kindle Paperwhite is my favorite tech gadget in a very long time, it such an excellent piece of hardware. A+++++

The Fire is another story, not the best hardware and it has limited tablet targeted software even by Android's meager standards.

As for making money, they won't make much from media but the "portable billboard" aspect will probably help them indirectly in other ways. If you're carrying ads for Amazon on your person, it makes you that much more likely to buy something from them.


This is to be expected....
By blueboy09 on 10/15/2012 8:40:43 PM , Rating: 2
I applaud Bezos for doing this his own way instead of Apple's way, but I wish we could let my dad use my account on his phone so he can purchase e-books with his credit card instead of using mine. It wouldn't let him, in fact, it damn near wiped out my e-books on my phone trying to figure the damn thing out!! You have to use seperate accounts in order to use a different card when you go through the Kindle store. Why I ask WHY?!




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