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Amazon: breaking even on popular Kindle sales

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Gus Ruelas/Reuters

(Read caption) Amazon CEO Jeff Bezos confirmed that some of the company's Kindle devices are sold at cost, meaning Amazon doesn't make a profit on the devices themselves but makes up for that loss with sales of content – from books to games to video.

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It’s what many of us have suspected all along, but Amazon’s Jeff Bezos only recently confirmed it.

Several Kindle devices are sold at cost, bringing Amazon no profit on the hardware.

In an interview with the BBC Wednesday, Bezos admitted that the Kindle Paperwhite and Kindle Fire HD are priced so low Amazon breaks even on the devices.

“We sell the hardware at our cost, so it is break-even on the hardware,” Bezos told the BBC.

Of course, Bezos isn’t necessarily doing the consumer any favors. That aggressive pricing is part of his goal to get Kindle tablets in as many hands as possible in order to broaden the base of consumers for Amazon’s online content – from books to games to video – which is the real cash cow of Amazon.

That strategy differs starkly from Apple’s. Apple makes a profit on every iPhone, iPad, and other iDevice it sells, with much content thereafter available for free, or “slightly above” break-even on iTunes content.


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