"Amazon.com Inc.'s new Kindle Fire tablet computer costs $201.70 to manufacture, about 1.4% more than the company prices the tablet on its website, according to market-research company IHS Inc.
.... 'The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point,' said Andrew Rassweiler, senior director of teardown services for IHS. 'Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle.'
That strategy is similar to video-game console makers, who for years sold consoles at losses or minimal profits, with the expectation of making money from the video games sold, or wireless phone companies who give out the hardware at a loss and make money from service contracts."
"Here's the difference between the Kindle Fire and the Apple Newton, Edsel, New Coke and Arch Deluxe: aales."
"Consumers have purchased more than a million Kindles in each of the past three weeks, the company said. The new Kindle Fire tablet -- which sells for US$199 -- is Amazon's most popular product.
The release of sales figures is a departure for Amazon. In the past, it has named Kindle its top-selling item without quoting actual numbers.
The Kindle Fire is the 'most successful product we've ever launched,' said Amazon VP Dave Limp, and has been the company's bestselling product in the 11 straight weeks since its debut.
Week-over-week sales have been increasing, he said."*
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