This Week in the Mercury
Friday, November 11, 2011
Books / Tech How Much Does a Kindle Kost?
Posted by Paul Constant on Fri, Nov 11, 2011 at 10:14 AM
That jaw-dropping $79 price point on Amazon's new Kindle just got a little nuttier: It turns out the thing costs $84.25 to manufacture, according to an exclusive report to Mainstreet by serial gear teardowner iSuppli.
Amazon operated at a loss for a long time back in the olden days, of course, but the frightened chickens of Wall Street don't have memories that stretch back that far. Between this and the Fire, Amazon is treading on dangerous ground; they'll make their money back eventually, if they sell enough devices. But expecting the stock market to put their expectations on hold while they take a bath for a couple of quarters is a serious risk nowadays.
1
Eventually? I bet they make those five bucks back by the time you've bought your first couple of books. The cost of selling each additional ebook is almost zero and the price you pay for the ebooks is pure profit for Amazon.
2
You mean it wasn't obvious to everyone they were selling these at a loss to boost business to their (arguably more profitable) content infrastructure? You'd think these Wall Street types didn't go to business school.
3
Isn't this pretty common in competitive markets? This is all about the razor blade model. Getting people to buy the razor for the cheap, so long term you make money off selling blades to them for the rest of their life.
4
This is common in lots of other media/content delivery systems -- Sony sold its video game consoles at a loss for years. Amazon isn't ever expecting to make a profit on the Kindle or Fire, they're going to make money on the movies, music, and books people are buying on the devices. They're probably going to have one of their best holiday quarters in a long time.
Of course, this wouldn't be a Paul Constant post without completely hyperbolic and myopic "analysis".
Of course, this wouldn't be a Paul Constant post without completely hyperbolic and myopic "analysis".
5
Look up "loss leader". Between the AV Club rips and questionable news coverage, Blogtown is losing its steam.
6
Also, the very next sentence in that Gizmodo article:
"The $79 Kindle is the "special offers" version of Amazon's ereader, which means it features localized advertisements on its lock and home screens. The non-special offers version of the same model costs $109, so Amazon probably isn't losing money in the longview."
DERP.
"The $79 Kindle is the "special offers" version of Amazon's ereader, which means it features localized advertisements on its lock and home screens. The non-special offers version of the same model costs $109, so Amazon probably isn't losing money in the longview."
DERP.
7
I'm starting to think that Paul never calms down about anything. I picture him just constantly flapping around the office: OMGOMGOMGOMGOMG!
8
Also, what's with the hate boner for Amazon? A week ago Paul was complaining that Amazon was LITERALLY MURDERING KITTENS from local businesses with their bar code scanner app, and now Amazon is LITERALLY MURDERING KITTENS on Wall Street. You would think he would be happy about the former sentiment?
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