Company doesn't mind low tablet profits if it means better sales of everything else

Oct 1, 2011 11:05 GMT  ·  By

As all new items tend to, the Amazon Kindle Fire tablet has fallen under the eye of analysts, who reached the conclusion that it is really just a means to an end.

When the Amazon Kindle Fire tablet finally showed up a few days ago, its price caused quite a few ripples, and deep ones at that.

After all, the 'average' media slate costs somewhere in the $400-$500 mark (or just as many Euro in Europe, despite what exchange rates would dictate)

As such, having a tablet that sells for $199 (about 146 Euro) is no small feat, especially knowing that previous rumors had set the bar at $250 to $300, which was already quite low.

Of course, while customers can only rejoice over this, Amazon is going to profit very little from selling the tablet, directly at least.

Analysts, however, recognized this item for what it really is, namely a means to an end.

Simply put, the item's role is to act as a new gateway to Amazon's extensive collection of online-available products.

In other words, buyers of the Fire will be exposed much more easily to the many things Amazon has for sale.

As such, the slate is, in the end, the vehicle for fulfilling Amazon's goal of promoting merchandise.

At first glance, this might not look like a very lucrative venture, since Amazon is estimated to make a marginal profit of just $10 on each Kindle Fire.

Then again, promoting merchandise does make sense, because regardless of all the hype of Kindle e-readers and e-books, Amazon still relies on physical goods.

As such, while it leaves it to e-readers to cover that part of its business, it hopes that Fire will get people to order shoes, clothing and everything else on its website.

The 7-inch Amazon Kindle Fire is described more or less in detail here.