Jeff Bezos revealed to the BBC that Amazon makes no profit off the Kindle Paperwhite and Kindle Fire HD. Both devices are sold at cost, which means, both devices’ price is how much it costs Amazon to make them.
That selling hardware for no profit is certainly much different from Apple’s strategy (it makes a profit on every iPhone and iPad sold) but not so different from video game companies who’ve traditionally sold their consoles (Xbox 360, PS3, etc.) at a loss. The thinking there is to make up the profit lost in the console with the cost of games and peripherals. That’s the same with Amazon. Use a Kindle and you’ll be buying stuff through Amazon. It’s like Amazon is providing everybody with slick shopping carts in tablet form.
Amazon has said that it doesn’t care much about making money off the hardware products, effectively saying it doesn’t care about people buying its products but rather people using its products. As each Kindle and Kindle Fire is tied to Amazon’s ever growing, sell everything store, it’ll still be making off Kindles and Kindle Fires anyway. Just not the old fashioned way. [BBC]