Thread: Amazon: Paying a Price for Going Cheap
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Old 07-31-2010, 06:20 PM   #44
kjk
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Quote:
Originally Posted by SensualPoet View Post
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.
Well, we can just agree to disagree. I do believe it is credible that Kobo and B&N are selling their hardware at or below cost, in order to win market share for their content. I believe Amazon responded by changing their strategy about making money on both hardware and content at this time.
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