# Fire costs Amazon money



## DYB (Aug 8, 2009)

...but not too much money. According to one analyst Amazon loses less than $3 per Fire.

http://www.usatoday.com/tech/news/story/2011-11-18/amazon-tablet-cost-of-production/51295014/1


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## Betsy the Quilter (Oct 27, 2008)

DYB said:


> ...but not too much money. According to one analyst Amazon loses less than $3 per Fire.
> 
> http://www.usatoday.com/tech/news/story/2011-11-18/amazon-tablet-cost-of-production/51295014/1


A couple book or app purchases, even cheap ones, and they're ahead of the game!

Betsy


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## trastan (Nov 14, 2011)

And, depending on how long they keep this model around, the tech costs associated with building it could certainly drop to where they're making money (or, at least, breaking even). Makes you wonder how large Apple's profit margins are on those iPads...


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## Edge (Mar 6, 2009)

Precisely the reason I support Amazon. They _get_ it. They will make more money in the long run by not being greedy up-front. They are selling the content first, and the device second.

They will get more of my money by showing goodwill this way than the fruit company ever will.


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## Guest (Nov 18, 2011)

When the first rumors started it was suggested one of the ereaders would be free with prime membership.  

I can say without hesitation that if they'd done it, I would never have purchased a book from any other source for the rest of my life... which may be why they considered it (execs have confirmed they did).

It's smart.


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## Finished (Feb 14, 2009)

They didn't lose $3.00 on mine. I have spent almost the price of the Fire in books, apps, accessories in the first 48 hours I have had it.


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## Maria Romana (Jun 7, 2010)

Just Wondering said:


> They didn't lose $3.00 on mine. I have spent almost the price of the Fire in books, apps, accessories in the first 48 hours I have had it.


Exactly! And they "get it" with regard to customer service, too. I've never heard so many positive CS stories from a single company. They know that as long as you have a working device in your hand, you are going to be a loyal, _spending _customer.

Now why is it so hard for other companies to catch on to this? It's not like Amazon's success and profitability is any secret...

--Maria


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## Finished (Feb 14, 2009)

Don't get me started on customer service. Amazon's is astonishing. I have never been disappointed. If the customer is reasonable, they are more than reasonable. I wish they owned an airline.


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## Hadou (Jun 1, 2011)

I'm kind of surprised that the "loss" is that small.  I expected it to be a bit more than roughly $3.


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## DYB (Aug 8, 2009)

Hadou said:


> I'm kind of surprised that the "loss" is that small. I expected it to be a bit more than roughly $3.


The early reports suggested a $50 loss. But since it's come out, been taken apart and evaluated - that has, obviously, dropped significantly.


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## Shastastan (Oct 28, 2009)

meromana said:


> Exactly! And they "get it" with regard to customer service, too. I've never heard so many positive CS stories from a single company. They know that as long as you have a working device in your hand, you are going to be a loyal, _spending _customer.
> 
> Now why is it so hard for other companies to catch on to this? It's not like Amazon's success and profitability is any secret...
> 
> --Maria


In another post, I suggested that they may have gotten an idea from the printer manufacturers who make all their money selling ink. However, Amazon may be the only big company around that recognizes the potential monetary value of customer loyalty. Just sayin'....
'g....


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## sarlen (Nov 18, 2011)

Just Wondering said:


> They didn't lose $3.00 on mine. I have spent almost the price of the Fire in books, apps, accessories in the first 48 hours I have had it.


Same here..I think they made it way to easy to spend money, the first two books I bought were by accident. The rest..well lets just say the UPS guy is going to be pretty busy..


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## AuburnSky (Aug 26, 2010)

Edge said:


> Precisely the reason I support Amazon. They _get_ it. They will make more money in the long run by not being greedy up-front. They are selling the content first, and the device second.
> 
> They will get more of my money by showing goodwill this way than the fruit company ever will.


I wholeheartedly agree!


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## DYB (Aug 8, 2009)

Shastastan said:


> In another post, I suggested that they may have gotten an idea from the printer manufacturers who make all their money selling ink. However, Amazon may be the only big company around that recognizes the potential monetary value of customer loyalty. Just sayin'....
> 'g....


I saw in some article someone mention that it's the Gillette business model. Away the razors to people will buy razor blades.


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## Lambert (Nov 12, 2010)

I'm sure their Prime membership will increase a lot with the Fire. I already had it, but many will now get it for the videos.

I easily made my 75 back though just on shipping.


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## trastan (Nov 14, 2011)

Lambert said:


> I'm sure their Prime membership will increase a lot with the Fire. I already had it, but many will now get it for the videos.
> 
> I easily made my 75 back though just on shipping.


Same here. For the volume of items I order each year from Amazon, Prime was tremendously worthwhile just for the shipping cost savings. That being said, if Amazon wants to continue to add value to it, you'll hear no complaints from me!


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## DYB (Aug 8, 2009)

Another analyst tore down the Kindle Fire and came up with a different estimate...

http://www.mercurynews.com/breaking-news/ci_19367309

$143.


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## TraceyC/FL (Mar 23, 2011)

1. Never underestimate the fruit companies customer service until you have experienced it. Been better than amazon for me.

2. I kind of can got both ways on this.... Are they setting a value they think it is worth, and then taking the loss knowing they will make it up, or are they just calculating the loss bottom line and setting the price.

My iPad was worth every penny I paid for it, I don't begrudge apple the price they set. It's been my primary computer since I got it. But I'm not sure how I feel about a company devaluing their product. It's the same way I felt about the books at $9.99. 

Anyway, I've been up since 12:30 for a sleep deprived EEG for my daughter, 3 hours away from home... When my ex decides to bring the youngest home, I'm going to sleep. Maybe I shouldn't ponder stuff like this so sleep deprived? LOL!!


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## DYB (Aug 8, 2009)

TraceyC/FL said:


> But I'm not sure how I feel about a company devaluing their product. It's the same way I felt about the books at $9.99.


I have never understood this. Value and quality are not related. A Coach bag is what? The greatest bag ever made? Should "War and Peace" cost $10,000? The complete works of Shakespeare $100,000,000? Why stop an iPad at $599?


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## jonathanmoeller (Apr 19, 2011)

> ...but not too much money. According to one analyst Amazon loses less than $3 per Fire.


If Amazon really sold five million of the things, then that's almost a $15 million dollar loss. Of course, they've probably made that up in digital media sales.

But, man. Talk about going big or going home.


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## DYB (Aug 8, 2009)

jonathanmoeller said:


> If Amazon really sold five million of the things, then that's almost a $15 million dollar loss. Of course, they've probably made that up in digital media sales.
> 
> But, man. Talk about going big or going home.


$15 million might seem like a lot to you and I, but to Amazon it's probably a monthly petty cash allowance.


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## TraceyC/FL (Mar 23, 2011)

DYB said:


> I have never understood this. Value and quality are not related. A Coach bag is what? The greatest bag ever made? Should "War and Peace" cost $10,000? The complete works of Shakespeare $100,000,000? Why stop an iPad at $599?


It just seems similar to mobile phones. A lot of people think an iPhone cost $199, but it doesn't, try $649, the carrier is just willing to pay that extra for you to keep you paying that bill.

Barnes and Noble has their tablet priced $50 higher, in my eyes the have a similar content cost. They are making a small profit on the device and aren't apt to make me feel like it is all about the push for content purchases.

I dunno, it is just a different take on the business model. Profit upfront, profit after the sale..... It does however make it hard for small competitors to offer up anything. They aren't going to be able to afford to take that loss on each device, so in the end only the big guys will survive.

Why can't they say they came out with this amazing product, with an amazing interface and you should buy it because it is so amazing, but alas, they feel that amazing awesomeness is worth less than they can make it for...

I'm still tired by the way, so I'm probably still over thinking!


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