Amazon sells the Kindle Fire for $199. But the cost of producing a tablet is $209.63. So, why does it sell a product at a loss?
For Amazon, the Kindle Fire is a bookstore and a movie theater and a record shop. And Amazon is the one selling the books, the movies and the records, of course. Once you enter the Amazonian cosmos, you have little to no option, but to buy all its intellectual goods.
This is the same business model that printer manufacturers often employ. A printer costs about $40, which is less than what it costs to produce it. The printer companies make all their money by selling ink cartridges that go into those printers.
Amazon didn’t start out as a computer company (like Apple did.) To Amazon, the computer is simply a means to an end.
COLD CLIPS 