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Old 02-08-2013, 07:30 AM   #14
murraypaul
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Posts: 3,224
Karma: 10210627
Join Date: Jun 2008
Device: Sony PRS505, Nook Color(CM7), iPad3
Quote:
Originally Posted by BookCat View Post
What is a walled garden reader?
What is a second tier, hardware-only vendor: this really confused me. I'm easily confused.
There are essentially two business models:
- Make hardware and sell it at a profit
- Make hardware, sell it at around breakeven, but operate an eBook store which the device is (sometimes loosely, sometimes tightly) tied to, and expect to make your profit on the eBooks, rather than the device.

All of the major devices (Kindle, Nook, Kobo) are sold on the second model.
Sony is the only major manufacturer operating largely in the first model, which is why their devices can be more expensive than the others. The other companies operating in the first model are smaller ones that most people would never have neard of.

It is a similar situation to games consoles. Microsoft and Sony sell their hardware (at least at launch) at a loss, but then make money on licensing fees on the games that are sold for that platform. The more consoles they sell, the more customers that are out there who will buy their games, so it is worth taking the initial loss for future profits.
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