Quote:
Originally Posted by kjk
I just don't see how they are making a hardware profit on them right now-unless the K2 had incredibly high profit margins to begin with.
My .02 cents of supposition anyways  I personally think its an incredibly aggressive move on Amazon's part, that the rest of the ebook market is going to have a tough time responding to. |
1- If iSupply can be believed the K2 build cost was $185 at *launch*, when it sold for $359. (100% profit margin). Plus, we know component costs have dropped some since then.
2- Amazon isn't being overly aggressive at all; they are merely *reacting* to nook. Remember them? Their primary competitor in the US? The ones who dropped connected readers to under $200 first? Who introduced the $149 Nook WiFi last month?
When you look at the component that go into Nook and into Kindle, it is easy to see why Kindle runs $10 less than nook; the membrane keyboard is cheaped than the LCD touchscreen and Amazon doesn't pay royalties to Adobe for ePub. Odds are, Amazon is making as much profit as nook on the hardware. *my* guess, for what its worth is that its probably on the order of $10-20. But I seriously doubt they're losing a single penny.
I think *both* companies are simply benefitting from economies of scale *and* the big order cancelled by the china mobile telecom.