Quote:
Originally Posted by kjk
The razors/razorblade model is used by rational companies all the time.
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No, the razors/razorblade model is used by
pundits all the time.
In corporate land -- and Bezos has stated the e-book and e-reader divisions are managed separately -- each division "wins" by hitting its own performance targets quarterly and annually.
No division is formed with a goal to lose money.
You clipped my quote but let me restate: "undisputed market leaders" are not incented to sell
anything at a loss. It is unwise, at best, to believe Amazon is losing money on every Kindle 3 WiFi unit it sells at $139 in the same way it's not credible to believe Barnes & Noble is happily handing over $149 WiFi Nooks below cost.
Let's not forget: Amazon's "razors" don't require a Kindle 3. You can purchase, consume and be entirely satisfied with your Kindle format e-books using only an iPad, Blackberry, Mac, Windows PC or Android device. This is yet another reason not to sell Kindle 3 at a loss and, in fact, to insist that the division turns an appropriate profit making, selling, supporting physical Kindles.