Amazon: Zero Profits from Kindle Fire HD and Paperwhite Sales
Amazon's Chief Executive Officer, Jeff Bezos, confirmed that the online retailer is not profiting from sales of its latest Kindle tablet and e-reader devices during a recent interview with the BBC. He added that this is primarily due to the sale of hardware established at cost prices.
Bezos made these remarks as the firm launched the new Kindle Paperwhite e-book reader and associated book-lending scheme readied for the UK, France, and Germany. Besides retailing books online, Amazon is hoping to expand their services by offering users the option to borrow up to one book each month from a selection of titles, including those by JK Rowling and writers who've published through Amazon's publishing system. Access to the Lending Library service will be tied to a £49 (approximately S$96) annual subscription to Amazon's Prime service.
The Kindle Paperwhite offers an illuminated E-Ink screen which enables users to read in the dark. This plants it firmly against rivals like the Barnes & Noble's Nook Glowlight and Kobo's Glo which tout similar features with a built-in light. He also added that "the devices' success would depend on how many books and other media files were subsequently bought by their owners". Although Amazon isn't making much from hardware sales of their tablets and e-readers, the company hopes to profit from sales of other physical products and media via its store.
"We want to make money when people use our devices, not when people buy our devices," Bezos told BBC News. "What we find is that when people buy a Kindle, they read four times as much as they did before they bought the Kindle. But they don't stop buying paper (sic) books. Kindle owners read four times as much, but they continue to buy both types of books".
Apple, on the contrary, highlighted that the company makes a sizable cut of its profits from device sales, while gleaning less from the iTunes store. Google provides tablet makers with the Android operating system for free, but takes a slice of profits made from app and media sales via the Google Play marketplace.
Source: BBC News