Amazon Kindle Fire Yields No Profit For Online Retailer

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Amazon CEO says content sales more important than hardware

Amazon doesn’t expect to make any profit on the sales of its latest Kindle tablets and e-readers, according to CEO Jeff Bezos.

The devices are being sold as loss-leaders in an effort to encourage users to purchase more content on Amazon’s digital marketplace, the Amazon Appstore, as well as physical products from its website.

Bezos made his comments as the online retailer launched its new Paperwhite e-reader and new Kindle Owner’s Lending Library book lending scheme. The Amazon Kindle Paperwhite is the company’s latest e-ink e-reader and has a built in backlight, similar to rival devices from the likes of Barnes & Noble and Kobo.

Kindle Fire Sale

The Kindle Paperwhite was revealed last month alongside the new 8.9-inch Kindle Fire HD and 7-inch Kindle Fire. All three devices are due to be released in the UK on 25 October.

Bezos explained that the success of the devices depended on how much media users bought, rather than the sale of units themselves. This differs from companies like Apple, which makes a tidy profit on its market-leading iPad tablet.

Android manufacturers are also more dependent on revenues from the sale of hardware as Google takes a cut from all media sold through the Google Play store.

The same loss-leading strategy was employed by Amazon with the original Kindle Fire, which proved phenomenally successful, but was never released in the UK.

Amazon also hopes that the tablet will boost the sale of physical products. Kindle owners tend to buy four times the amount of books they did previously, both ebooks and real books. The new lending scheme is tied to the Amazon Prime service which promises quick delivery on physical products. Although this means greater shipping costs for the company, customers are far less likely to use rival retailers.

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