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One thing to remember though, Amazon doesn't have to deal with middlemen resellers out to make a buck. That can certainly help drive down the cost. What is the traditional reseller markup on electronics? Let's say for the sake of argument that its 20%. That means that resellers of the Sony PRS-505 make $60 on every one they sell at MSRP. Since Amazon doesn't need to go through the retail market, they could sell a self-manufactured device of the same manufacturing cost for $240 and still make a profit (because I haven't removed Sony's margin yet).
Who knows which direction Amazon will decide to take things. But one thing is for sure, they have the ability to undercut the competition due to both its dominance as an online bookseller and its significant ability to sell its own device exclusively.
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