Quote:
Originally Posted by charmian
Are they taking a loss on the $99 Nook STR?
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Nobody outside B&N (plus, maybe, Amazon and Kobo) really knows.
(A lot depends on their ability to negotiate component costs and manage inventory.)
What is definitely known is that Amazon is taking a much lower total loss (if any) than B&N; the K4, which is undoubtedly cheaper to build than the Nook STR, is estimated to cost around $79 to build.
With an ad-free retail of $109 for the K4 (and $139 for the KT and KK) and an undetermined ad-revenue stream, Amazon might even be turning a decent profit on the entire Kindle hardware operation even if individual unit sales of the KinSOs might generate a loss.
B&N has no such option; their $99 price is across the board, for every STR.
Going by the K4 estimate they might at best be (barely) breaking even on partner B&M sales and earning a modest profit on online sales. Where they are likely taking a bath is the $79 full-warranty refurb STRs and the warehousing of the remaining original Nooks. They also aren't likely enjoying much profit on the refurb NCs.
Also undetermined is how much ebook revenue each ereader generates; the attach rate (in console gaming parlance). But since that revenue will only manifest slowly over time, the possibility of B&N running into a liquidity crunch is non-zero if they are in fact losing money on the hardware.
It's a dangerous game, trying to keep up with Amazon in a price war.