Despite the fact that Amazon has a new array of devices, the company seems to care more about being in the business of selling content and not devices. This is how they push ahead with competitive pricing. They don’t seem to care too much about making a profit on the device at all.
According to a report in the Wall Street Journal, the $199 tablet is not likely to make Amazon much at all. Here is more from The WSJ: “A preliminary estimate conducted by IHS pegs the total cost to produce the Kindle Fire at $209.63. Adding in expected sales of digital content per device, IHS estimates Amazon is likely to generate a marginal profit of $10 on each Kindle Fire sold.”
The company led the way with bargain basement pricing for Kindles back in the days of eReader price wars and are largely responsible for the cost of entry being so low on eReaders today. With a $79 eInk device now available and a $199 tablet, Amazon is proving that they want to own the content business.