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Amazon says e-readers are loss leaders
Amazon.com Inc. Chief Executive Officer Jeff Bezos said the giant U.S. online retailer did not make a dime with sales of its digital readers.
“We sell the hardware at our cost, so it is break-even on the hardware,” said Bezos, referring to the Kindle Fire HD and Paperwhite devices.
The BBC said the company used the so-called digital readers as a springboard to sell books and other content.
“We want to make money when people use our devices, not when people buy our devices,” the Los Angeles Times quoted Bezos as saying.
The admission that the two readers are what retailers call a loss-leader — usually a must-have item that is sold at a loss or break-even price to lure customers into a store — came as Amazon launched a book-lending service in Britain, Germany and France.
The service will run by subscription, which would give readers access to select titles in the Kindle Owners’ Lending Library, the BBC said.
The strategy contrasts with that of Apple Computer, which has said it runs its iTunes store at just above break-even prices, while relying on revenue from the hardware to make a profit.
Copyright 2012 by United Press International