Amazon doesn’t make a dime in profit from sales of its Kindle e-readers and tablets, according to the company’s founder and CEO Jeff Bezos.
Bezos has been quoted as saying
“We sell the hardware at cost. We want to make money when people use our devices, not when they buy them.”
This is the first time Amazon has confirmed long-held Wall Street assumptions that it did not make a profit on sales of the popular tablet. Previous estimates have suggested that Amazon might even sell some of its Kindle products at a slight loss.
The aggressive pricing furthers the company’s goal of getting Kindle tablets into the hands of as many buyers as possible to sell Amazon’s online content games, books and video.
Google has been another company that sells their Android OS at loss on the hopes of making a profit elsewhere. Google’s business model involves getting paid automatically any time you use an app or visit a website.
Apple, by contrast, makes much of its profit from hardware sales. It sells a single-sized iPad at costs ranging from $399 to $829, depending on storage capacity, screen resolution and wireless connectivity.
Bezos has said repeatedly over the years that Amazon’s business model is to survive on slim profits. The Kindle is seen as more of a gateway to the many products sold by the website. Amazon has profited by this as there product is build on the droid OS and price point is affordable for most people. I think Jeff Bezos business model is smart for an online retailer.