Friday, September 30, 2011

Amazon's Kindle Fire Being Sold at a Loss

Amazon's Kindle Fire Being Sold at a Loss

The Register: Amazon's Kindle Fire being sold at a loss
"But if IHS's preliminary analysis is correct, Amazon is more canny than that old thigh-slapper might suggest. IHS believes that Amazon is willing to make only a marginal profit on the Fire plus a relatively small amount of digital content that users will buy per tablet, because the online retailer is using it as a loss-leader to get customers into its online store where they'll pay good, high-margin money for gadgets, gizmos, and gewgaws.

A reasonable argument, but Amazon may have more than mere enticement in mind. Digital content – warning: prepare for a "well, duh!" statement – is the wave of the future."


Well, duh... indeed. 

All Nurses Central reports on the competition (which might explain just why HP is attempting to bail on hardware):
"I read an article back in August by Brooke Meyer titled “Who Made Your Notebook?” Mr. Meyer’s article so interested me that I wanted to share some of it with you today. You can keep up with Brooke Meyer’s reporting on technology by browsing to his website called Brooke's View.
According to Mr. Meyers, the answer to the question he posed is:

"Not the company whose name is on it. Why? “…competition for orders is also expected to further lower notebook makers’ gross margins in 2011 from 4% in 2010.”
  • After the OEM/ODM 4% profit, “manufacturers” like Dell make 5% and HP earns 9%.
  • Apple’s profit on each iPad ranges from 40 to 55%. (Who makes iPads? FoxConn.) Selling 2 million units each month, Apple wins.


If the Amazon Kindle Fire adds nothing to the bottom line... 

How much profit does Amazon make on a digital download of a $9.99 eBook or album?


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