Amazon makes money from its services rather than its hardware

Nov 11, 2011 13:58 GMT  ·  By

If you ever thought that Amazon is in the hardware business, you should reconsider that idea as the company sees its devices just as a way of delivering its services to as many customers as possible.

The best proof of this claim is the new entry-level Kindle that Amazon has recently released at $79 (58 EUR).

According to an IHS iSuppli study, the eReader actually costs the company $84.25 to build, which means that every time it produces a new Kindle it loses a bit of money.

But the smart thing that Amazon does here is to sell you a device that enables it to deliver its content to a wider user base.

This way, Amazon will actually make much more money from their Kindles, via the digital content delivered to you, than it could ever will by selling a more expensive eReader.

For a complete breakdown of the fourth-gen Kindle production costs take a look at images in the galley bellow.

Amazon Kindle eReader (2 Images)

Amazon fourth-gen Kindle
Amazon fourth-gen Kindle production costs
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