This is a discussion on Amazon Confirms They Make No Direct Profit From Kindle Device Sales within the Amazon Kindle Fire News forums, part of the Amazon Kindle Fire & Site News category; On Thursday, Amazon did something it doesn't do very often. It shared some details about its profits and business model regarding Kindle devices. Apparently, all ...
On Thursday, Amazon did something it doesn't do very often. It shared some details about its profits and business model regarding Kindle devices. Apparently, all the rumors we have heard about the company only breaking-even on the direct sale of the Kindle devices were true. Of course, the company's true strategy is to get the device into the hands of consumers who will gobble up the content it provides, and that is where they are raking in their profits. Amazon CEO, Jeff Bezos revealed the following,
Of course the added brilliance of this strategy is that over time, the costs for building and marketing those devices will come down, so even after they profit from the sales of digital content, later on they also will start to make money on the devices as well. Or, at the very least they can bring out new replacement devices that continue to break even, and then drop the prices of their older devices even further, thus driving their brand loyalty higher. That's a brilliant business strategy no matter how you slice it.“Basically, we sell the hardware at our cost, so it is break even on the hardware. We’re not trying to make money on the hardware. We want to make money when people use our devices, not when people buy our devices.”
Last edited by dgstorm; 10-26-2012 at 10:11 AM.