This is hardly a surprise, but Amazon’s Jeff Bezos has confirmed that the company makes no profit on its new Kindle hardware sales. The news means that, as suspected, Amazon sees the Kindle as a ‘portal’ that seeks to tie users into the Amazon purchasing experience, with the company making its money through content sales.
The strategy makes sense, and in fact Bezos’s comment that they sell the Kindle “at our cost” and that it’s “break-even” on the hardware would seem to suggest that Amazon might even make a small loss by the time shipping, marketing and other factors are brought into the equation. Some commentators have argued in the past that Amazon might be subsidizing the cost of Kindles, and might be losing money on each sale. That seems not to be the case, at least not to any great degree.
Bezos also claimed that people tend to read four times as much after buying a Kindle, but that this doesn’t eat into the number of paper books they buy. In other words, the Kindle doesn’t encourage readers to switch from paper to digital, but rather encourages them to read more than they would have read before.
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