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Amazon confirms it sells hardware at cost, not making money on it

Posted: , by Victor H.

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Amazon confirms it sells hardware at cost, not making money on it
The Amazon Kindle Fire kickstarted the niche of $199 7-inch tablets that has grown tremendously since then. But if you think that Amazon reaps huge margins out of the device, you’d be wrong.

Amazon lastly unveiled its second wave of Kindle tablets under the Fire HD brand. All of them come with high-resolution screens with prices starting from $199 for the 7-inch model, and $299 for the 8.9-inch device.

"Basically, we sell the hardware at our cost, so it is break even on the hardware," Bezos said in an interview for the BBC. "We're not trying to make money on the hardware."

So where does Amazon makes its profits from? Obviously, it works similarly to the way Google does with Android by releasing the world’s most popular operating system for free. In this case, Amazon doesn’t do it for the ads, but for user engagement into its ecosystem. That model is hardly making it much money, but revenues are growing and some people like Google chairman Eric Schmidt actually think it’s one of the big four along with Google, Apple and Facebook.

source: BBC

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posted on 12 Oct 2012, 06:21 3

1. kirholstov (Posts: 137; Member since: 28 Jun 2012)


They are making money on apps, films, music and books

posted on 12 Oct 2012, 06:41 3

2. wendygarett (unregistered)


No wonder kindle fire satisfied the most on android tablets...

posted on 12 Oct 2012, 06:52 3

3. ibap (Posts: 706; Member since: 09 Sep 2009)


This is not a new model. Think old-style razors with replaceable blades and ink jet printers with cheap printers and expensive ink.

posted on 12 Oct 2012, 06:53 3

4. cepcamba (Posts: 717; Member since: 27 Feb 2012)


They won't make money from me when I get one of those 1080p 8.9" tab 'cause I'd be rooting and putting a custom ROM on it and I wouldn't even see a glimpse of the Amazon Ecosystem *that's if devs work on it :p

posted on 12 Oct 2012, 09:48 2

5. paulyyd (Posts: 327; Member since: 08 Jan 2011)


cool bro

posted on 12 Oct 2012, 10:04 3

6. JonBjSig (Posts: 176; Member since: 17 Nov 2011)


And yet Google is still able to sell a better tablet for the same money.

posted on 12 Oct 2012, 13:56

8. downphoenix (Posts: 2373; Member since: 19 Jun 2010)


Um no, because

1) This has double the memory.

2) The processor performs higher on benchmarks.

posted on 12 Oct 2012, 14:58 1

9. JonBjSig (Posts: 176; Member since: 17 Nov 2011)


The benchmarks I found here:http://www.techhive.com/article/2009922/kindle-fire-hd-review-a-big-improvement-from-amazon.html say otherwise.

posted on 12 Oct 2012, 10:21 2

7. yoyo93 (Posts: 34; Member since: 23 Sep 2012)


Another reason to love Amazon.

posted on 12 Oct 2012, 18:30 2

10. JeffdaBeat (unregistered)


Make no mistake, they will make money off of you in some fashion. They aren't doing this out of the kindness of their hearts.

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