Quote:
Originally Posted by Nathanael
Amazon is undoubtedly taking a loss on every sale, treating the Kindle much the way MS treats the X-Box -- as a loss-leader, hoping to make up the difference in game sales.
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Uh, no. That is factually incorrect.
Both Amazon and Microsoft sell the hardware at market prices. Neither is a loss leader.
Amazon in particular it is well known that Kindle2 launched with 100% markup.
http://www.isuppli.com/News/Pages/Am...n-Reveals.aspx
Since then the switch to AT&T wireless and normal component reductions brought costs down yet they still maintained the price as high as they could. They only cut the price as a response to Nook's price cut.
That is hardly loss-leader pricing and has been discussed to death around here since the recent baseline price reset.
As for XBOX, it is equally well-documented that the console reached breakeven back in 2006 and has been producing hardware profits ever since.
http://www.gamasutra.com/php-bin/new...hp?story=11833
They have been generating significant profit since at least 2007:
http://www.next-gen.biz/news/isuppli...ntinue-decline
Finally, it is hardly a secret that the new 360s with the single -chip architecture at $299 has a profit margin of over US$100.
Sony, on the other hand, was still sustaining hardware losses on PS3 as recently as December 2009.
http://www.isuppli.com/News/Pages/So...-3-Design.aspx
You're apparently new 'round these parts it seems, so you may not be aware of these old hashed out discusssions. Thus, a word of advice: stick to opinions in defending your personal biases. You can choose to ignore reality in your decision-making all you want and few will call you on it but claiming factual basis for myths will get challenged every time.
Toodles!