Amazon Sells Kindles at Cost

Tricia Duryee for All Things Digital, referring to the price of Amazon Kindles, writes:

But apparently [Amazon CEO Jeff] Bezos has tired of dancing around the subject, because when the BBC asked on Thursday, he answered: “We sell the hardware at our cost, so it is break-even on the hardware.”

As expected, Amazon sells its Kindle devices at cost. The online retailer sells Kindles to customers at virtually the same price it costs the company to manufacture the devices, instead earning profits from the sale of digital books and other content.

Apple takes an entirely different approach with the iPad, maximizing on sales of the tablet thanks to a generous profit margin. At the same time, Apple still receives its 30 percent cut from iTunes Store, App Store and iBookstore sales. Bezos notes that Amazon’s approach is not necessarily the right approach, but is something the company has been doing since its founding.

[All Things Digital]

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