Amazon will not be making any money off the new Kindle hardware, and according to Amazon's Jeff Bezos, the E-readers and Kindle Fire tablets are being sold “at our cost.” The tactic is completely logical, because Amazon is an online retail that relies heavily on sales of tangible and digital goods.
The hardware that Amazon launches are merely tools to promote the goods that are offered through or by Amazon. Kindles and Amazon E-readers all promote the sales of digital goods such as e-books, music, and videos.
“We sell the hardware at our cost, so it is break-even on the hardware,” Bezos told the BBC. “We want to make money when people use our devices, not when people buy our devices.”
(Amazon's Kindle Paperwhite)
Rival tablets/E-readers makers such as Google and Barnes & Noble have their work cut out for them, since their business strategy in the tablet market seem to mirror that of Amazon’s. Apple on the other hand, has always been selling their devices for profit, and investing heavily in the iOS app market to maintain a loyal customer base.
Bezos also noted that people who purchase Kindle tend to have an increase in their reading habits, regardless of the medium—digital or prints.
“What we find is that when people buy a Kindle they read four times as much as they did before they bought the Kindle,” he said. ”They don’t stop buying paper books. Kindle owners read four times as much, but they continue to buy both types of books.”
The recently launched Kindle Paperwhite reader in selected European markets will only help to maintain Amazon’s dominance in the distribution of digital goods.