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Amazon Selling Kindle Fire HD, Paperwhite at Cost

By - Source: BBC | B 15 comments

Jeff Bezos relies on users purchasing books and other media on the devices itself.

Amazon head Jeff Bezos has said the world's largest online retailer doesn't turn in a profit with its Kindle Fire HD tablet, as well as the soon-to-be-released Paperwhite e-reader device. Bezos stressed that Amazon sell the hardware at cost.

He later added that both devices' success would be defined by how many books and media files were bought by users. "We want to make money when people use our devices, not when people buy our devices," he said.

Bezos said that part of the reason the aforementioned strategy works was due to the fact that users' desire for media grows when they've owned one of Amazon's devices.

"What we find is that when people buy a Kindle they read four times as much as they did before they bought the Kindle. But they don't stop buying paper books. Kindle owners read four times as much, but they continue to buy both types of books," he added.

Amazon's Kindle Paperwhite and the 7-inch Kindle Fire HD tablet will begin shipping within Europe on October 25.

 

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  • 5 Hide
    assasin32 , October 15, 2012 8:07 AM
    Makes sense they make it difficult for competitors and give customers a convenient way to spend money with them. They eat the cost of not making money for now and make even more when the customer buys products for said device.
  • 5 Hide
    aggroboy , October 15, 2012 8:55 AM
    Kinda opposite of Apple. Steve Jobs would use itunes as key draw to sell more premium devices, whereas Amazon would sell devices at cost to promote use of their site.
  • 0 Hide
    jankeke , October 15, 2012 10:38 AM
    Since I have a Kindle, I read more books but I dont buy paper books anymore. It's so much easier to just go online an buy an ebook and get it in seconds. But I still buy paper magazines.

    I use my Galaxy Note far more for reading than anything else. Very practical. I just read the Kindle when I am home.
  • 5 Hide
    wintermint , October 15, 2012 10:38 AM
    They are not making a profit but this doesn't mean they are eating away at their own money. They are selling it for the price it cost to manufacture it. Although they do not make money selling the devices, they will eventually make money off the consumers with ads, apps, digital purchases, music, ebooks, etc. Just by spreading their products far and wide (by selling at low prices) the profit will snowball.
  • 2 Hide
    bustapr , October 15, 2012 11:22 AM
    lol I actually read the title as "Amazon Selling Kindle Fire HD at Paperwhite Cost", I was almost already opening a new tab to amazon to buy one.

    I like how amazon does this. they sell their stuff at cost and massively promote their site. I personally have spent 2x more money on amazon ever since I got my kindle, so from my POV this model works well for them. Sucks for competitors though.
  • 0 Hide
    teh_chem , October 15, 2012 12:17 PM
    I am an Amazon user, have a fire 8.9" on pre-order (looking forward to it), but even then, I'm apprehensive about Amazon's business model. Not because it it's viable for long-term success, but because of the things I've heard about them doing in the past--such as incentivising consumers to go to physical stores, scan a barcode, and then get a discounted price if they end up buying that item on Amazon (note--a shopper isn't given the discounted price on amazon if they don't scan a barcode for the item). Don't recall what they called that program, but it was around winter of last year. I think that sucks--it essentially turns B&M competitor stores into showrooms for Amazon sales. Of course, customers have generally "shopped around" before online sales became a major way people bought things, but that's just a bit too sleazy if you ask me, especially since there are significant costs associated with having a B&M store, creating a showroom/display for items, and incurring all of the associated costs with employees and sales reps, etc. I think there's a principle difference between shopping someplace and finding a lower price or asking to price-match, and essentially Amazon intentionally out-bidding the price universally by implementing discounts on items if you scan a physical barcode in-store.
  • 0 Hide
    alidan , October 15, 2012 12:42 PM
    teh_chemI am an Amazon user, have a fire 8.9" on pre-order (looking forward to it), but even then, I'm apprehensive about Amazon's business model. Not because it it's viable for long-term success, but because of the things I've heard about them doing in the past--such as incentivising consumers to go to physical stores, scan a barcode, and then get a discounted price if they end up buying that item on Amazon (note--a shopper isn't given the discounted price on amazon if they don't scan a barcode for the item). Don't recall what they called that program, but it was around winter of last year. I think that sucks--it essentially turns B&M competitor stores into showrooms for Amazon sales. Of course, customers have generally "shopped around" before online sales became a major way people bought things, but that's just a bit too sleazy if you ask me, especially since there are significant costs associated with having a B&M store, creating a showroom/display for items, and incurring all of the associated costs with employees and sales reps, etc. I think there's a principle difference between shopping someplace and finding a lower price or asking to price-match, and essentially Amazon intentionally out-bidding the price universally by implementing discounts on items if you scan a physical barcode in-store.


    i never buy something from a B&M if i am ever given a choice.
    i do use them almost exclusively as a showroom floor for things i want.
    what that program did, was just give me a discount for doing what i was already doing.
  • 1 Hide
    teh_chem , October 15, 2012 12:57 PM
    alidani never buy something from a B&M if i am ever given a choice. i do use them almost exclusively as a showroom floor for things i want. what that program did, was just give me a discount for doing what i was already doing.

    The difference is that items were not discounted until the customer essentially expressed intent to buy it from a B&M store and scanned a B&M barcode and were then offered a further-reduced price via amazon's app. It's one thing for a customer to evaluate advertised prices and buy the cheaper one vs. a business (like Amazon) to ask a customer to conduct price-investigating (via their app), harvest that data, and then sell the item(s) at an arbitrarily reduced price just to beat the scanned-barcode price. IMHO, that's well beyond the ethical gray area of competing with other businesses. If Amazon can afford to sell it at a further-reduced price, why not just sell it at that price in the first place? And where's the limit? Again, I like the convenience of using Amazon for a lot of the things I buy, but I think people so blindly purchase through Amazon and get even more blinded by their good customer support and ease-of-use that they don't consider the consequences it has on local businesses that essentially become Amazon's un-paid, unofficial showrooms.
  • 0 Hide
    beardguy , October 15, 2012 2:04 PM
    Bought a Kindle Fire HD and love it. It's better in every way over the original Kindle Fire. The build quality is excellent. The ads don't bother me, but I may just pay the $15 to remove them. I just read they are releasing an update for the OS in the next few weeks that will let users remove the "Users also bought" that you see on every screen which is nice.

    For $199, you just can't go wrong. I recommend buying one from Best Buy or similar store though, as my first one had a defective screen and I had to return it.
  • -1 Hide
    fuxxnuts , October 15, 2012 2:06 PM
    teh_chemThe difference is that items were not discounted until the customer essentially expressed intent to buy it from a B&M store and scanned a B&M barcode and were then offered a further-reduced price via amazon's app. It's one thing for a customer to evaluate advertised prices and buy the cheaper one vs. a business (like Amazon) to ask a customer to conduct price-investigating (via their app), harvest that data, and then sell the item(s) at an arbitrarily reduced price just to beat the scanned-barcode price. IMHO, that's well beyond the ethical gray area of competing with other businesses. If Amazon can afford to sell it at a further-reduced price, why not just sell it at that price in the first place? And where's the limit? Again, I like the convenience of using Amazon for a lot of the things I buy, but I think people so blindly purchase through Amazon and get even more blinded by their good customer support and ease-of-use that they don't consider the consequences it has on local businesses that essentially become Amazon's un-paid, unofficial showrooms.



    sounds like bait/switch to me. not sure how thats legal business practice.
  • 0 Hide
    beardguy , October 15, 2012 2:06 PM
    btw, the picture in the article is of the original Kindle Fire, not the Kindle Fire HD :) 
  • 0 Hide
    Anonymous , October 15, 2012 3:09 PM
    No, it's simple pricematching. "I will meet, or beat any competitor's price".

    B&M's have been doing this for decades.
  • 1 Hide
    DSpider , October 15, 2012 5:28 PM
    So basically, with this mentality, say goodbye to ePub. Yes... I know you can convert them to Mobi, but it's kind of like converting a RAR archive to ZIP; they're pretty much the same format.

    They're not losing money by selling you the device. You pay for what it costs to make one + the retailer's profit.
  • 0 Hide
    kartu , October 15, 2012 8:42 PM
    So in what position are real hardware manufacturers (not counting white box delivery boys).
    Go compete with someone who doesn't care about making money on hardware.
  • 0 Hide
    fuxxnuts , October 16, 2012 4:14 AM
    Logic 101No, it's simple pricematching. "I will meet, or beat any competitor's price". B&M's have been doing this for decades.


    no it isnt. Amazon is clearly not upfront about it. I cant just goto Macy's, find a lower price than amazon and call it in. I need a specific app, and i need to be specifically targeted.

    this is shady business practice. Sell someone an item at MSRP for some people, other people sell at 10% off MSRP.