We make money on the content
Amazon has admitted that it is flogging its Kindle tablet at cost in the hope of making the money back on content.
Amazon Chief Executive Jeff Bezos said that profit for the project comes from sales of online content which more than make up for the hardware costs. Bezos' remarks, in an interview with the BBC, marked the first time the company had confirmed long-held Wall Street assumptions that it did not make a profit on sales of the popular tablet.
Aggressive pricing furthers Bezos' goal of getting Kindle tablets into the hands of as many buyers of Amazon's online content as possible. Once they have bought a Kindle they are less likely to buy online content from elsewhere, which seems about right.
Apple, by contrast, makes much of its profit from hardware sales. It sells a single-sized iPad at costs ranging from $399 to $829, depending on storage capacity, screen resolution and wireless connectivity. It does have a walled garden of apps but that is not its main focus.