If you ever wondered how come Amazon’s Kindle e-reader seemed to be amazingly affordable, the cat is out of the bag from the horse’s mouth. Amazon Chief Executive Jeff Bezos has confirmed that their Kindle e-reader is virtually sold “at cost”, where the online retail giant makes money from the Kindle range through the sales of online content. Now, this is more or less an open secret to many for a long time now, considering how Amazon does not have the kind of marketing and clout that Apple has to make money off hardware as well as software.
You know what they say – if it ain’t broken, don’t fix it. The way we see it, Amazon did not really have a choice in pricing their Kindle e-readers higher, since it might be priced out of the market. Better use the same model that video game console manufacturers have espoused most of the time in recent years – lose some money on the hardware, but make up for it on the software front. At least it sees the population of Kindle e-readers grow, while consumption of content increases in tandem. Well, different roads lead to Rome still, with proverbial Rome here being profitability.