It’s True, Amazon Makes No Money From the Kindle

by Nate Wooley | October 12, 2012 12:40 pm

It’s True, Amazon Makes No Money From the Kindle

Amazon (NASDAQ:AMZN[1]) CEO Jeff Bezos has confirmed that the profit plan for the Kindle doesn’t center on the hardware. Instead, Amazon aims to make its money when the Kindle is used.

Bezos, now in his 18th year as CEO of Amazon, said that  the online retailer is focused on innovating and creating, reports the BBC[2]. The cash comes when customers use their Kindles to purchase books, movies and other items through the device.

Amazon acknowledges that the margin on their devices can be thin but the volume of sales from Kindles make the effort worthwhile. In addition, Kindle users have a certain “stickiness” — once they start buying with their Kindle, they’re locked into continuing to do so or face the loss of their prior purchases.

On the heels of a successful launch in the U.S., the Kindle Fire is being rolled out in the U.K. There it will compete with Apple’s (NASDAQ:AAPL[3]) iPad, as well as other Android-run devices such as Google’s (NASDAQ:GOOG[4]) Nexus.

More from the tablet race:

Endnotes:
  1. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  2. reports the BBC: http://www.bbc.co.uk/news/technology-19873530
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  5. As Android Tablets Surge: Panic for Apple?: http://investorplace.com/2012/10/as-android-tablets-surge-panic-for-apple/
  6. Study: Half of U.S. Adults Own Tablet or Smartphone: http://investorplace.com/2012/10/study-half-of-u-s-adults-own-tablet-or-smart-phone/
  7. Gadgets Galore: Rounding Up the Reveals: http://investorplace.com/2012/09/gadgets-galore-rounding-up-the-reveals/

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