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

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

Related phones

Kindle Fire
  • Display 7.0" 1024 x 600 pixels
  • Processor TI OMAP4, Dual-core, 1000 MHz
  • Storage 8 GB

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10 Comments

1. kirholstov

Posts: 146; Member since: Jun 28, 2012

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

2. wendygarett unregistered

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

3. ibap

Posts: 865; Member since: Sep 09, 2009

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

4. cepcamba

Posts: 717; Member since: Feb 27, 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

5. paulyyd

Posts: 340; Member since: Jan 08, 2011

cool bro

6. JonBjSig

Posts: 176; Member since: Nov 17, 2011

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

8. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Um no, because 1) This has double the memory. 2) The processor performs higher on benchmarks.

9. JonBjSig

Posts: 176; Member since: Nov 17, 2011

7. yoyo93

Posts: 34; Member since: Sep 23, 2012

Another reason to love Amazon.

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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