Amazon's Bezos Explains How It Makes Money While Keeping Prices Low
Fascinating interview with Jeff Bezos. On the topic of losing money on the Kindles, he notes:
We don’t disclose the exact bill and materials, so I can’t answer that. But we don’t want to lose a lot of money on the device because then we’d really hate it if you put it in the desk drawer. On the other hand, if you make a lot of money on the device, I believe you haven’t earned your money on it yet, and then you’ve incentivized them (the customers) to stay on the upgrade treadmill that I mentioned today.
Translation: we are making some money, but not a lot. (Though it’s not clear the Kindle eReader vs. Kindle Fire breakdown there.)
And on the topic of the $499 cost of Kindle Fire HD subsidizing the data plan, Bezos:
I’m not going to break out the economics of any particular piece with you, but you’re right, it’s an astonishing price point.
Translation: Likely yes.
