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    Amazon's Kindle Fire Money-Making Strategy Is Working

    Though Amazon loses money on the production of each Kindle Fire, the company more than makes up for it in digital media sales -- just as planned. With its chintzy feel, slow interface and bugs, the Kindle Fire hasn't impressed. But for Amazon that doesn't matter, because for each Kindle sold, the company makes over $100 in additional revenue, according to  research from investment firm RBC Capital. And even though the $99 tablet has its issues, it's selling

    RELATED: Amazon Releases a Partial Fix for Kindle Fire Bugs


    "We don't think of the Kindle Fire as a tablet. We think of it as a service," Amazon CEO Jeff Bezos told Businessweek after making the tablet announcement. But the fact the the Kindle Fire is a tablet, and not a laptop or smartphone, makes a difference. Tablets bring out our inner online shopper. Tablet users spend over 50 percent more per purchase then smartphone users and 20 percent more than computer shoppers, according to research released by Adobe today. That same research concluded that tablet shoppers are three times more likely to make a purchase than phone users. And last year these users spent, on average, more than phone and computer buyers, as the chart below shows. 

    RELATED: All Those Cheap Kindle Tablets Are Killing Amazon's Profits


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    Even with Amazon losing money on each Kindle Fire -- around $3 to $4 dollars last time we checked -- the shopping machine is a money-maker, with RBC estimating that each Kindle Fire makes Amazon $136 in a three year lifetime. The company has sold an estimated 5.5 million units, meaning it's banking $748 million in additional revenues for the company. And as Amazon gets around to fixing all the hardware and software glitches, we imagine the budget option will look more appealing to wannabe tablet owners. 

    RELATED: Sell Cheap Tablets and the People Will Come


    Of note for that other, more expensive, tablet maker, that same research found consumers spend most on books. Apple must've seen that coming as it just announced iBooks 2.0 this morning. 

     

    20 comments

    • Redskinsmaniac  •  Roanoke, Virginia  •  1 mth 4 days ago
      My Kindle Fire is FANTASTIC! I hate to point this out to the hipster wannabe writer of this article, but not everyone is so insecure that they want to pay apple 3x what a product is worth just to be part of the "i" crowd.....
    • Paul  •  Baton Rouge, Louisiana  •  1 mth 4 days ago
      Why does every article trash the Kindle Fire? I've had mine for over a month and not one problem. Moves quickly, downloads perfectly and works great. This article is a scam plus it's $199 not $99. Way to check your facts. Stay Classy Atlantic Wire...
    • Apophis Ascended  •  1 mth 4 days ago
      I really like my Kindle Fire...it does exactly what I want it to do..store books for me to read, and stream Pandora.
    • Leon  •  1 mth 4 days ago
      Hey Rebecc-duh, calling the Kindle Fire unimpressive and then citing an article YOU wrote about it being unimpressive is hilarious! Whata douche.
      Anyway, I LOVE the Fire. Especially if you have Amazon Prime, this thing is the awesome. Movies, games, apps, web, streaming (Sons of Anarchy and The Twilight Zone are streaming free, FTW!!). Seriously, what more do you need? A camera? Quit being a child and get real one.
    • Lynne  •  Syracuse, New York  •  1 mth 3 days ago
      I love my kindle fire, people at work saw mine and 3 went out and got their own!
    • Kim  •  Portland, Oregon  •  1 mth 4 days ago
      Check your facts. the Kindle Fire is $199, not $99.
    • HR Puffnstuff  •  1 mth 4 days ago
      Kindle Fire is meant for people just like me. My job entails me to review and test technology all day. When I use my own technology, I don't need fancy bells, whistles, and complication. I need something I can do exactly what I want it to do. Kindle Fire does all that and more. I think folks like to say they have an iPad. But average folk don't really need all that. Unless you're flying to Mars or making a movie.
    • Brad  •  St Clairsville, Ohio  •  1 mth 3 days ago
      i dont know what these people are talking.. My kindle works great and I love it. I have had more problems with iTunes. I like Android devices. Apple gear is way overpriced and not any better.
    • ColtsThunder  •  1 mth 3 days ago
      "With its chintzy feel, slow interface and bugs, the Kindle Fire hasn't impressed"

      chintzy feel? really? stupid woman. do you even own a fire?? Im guessing not. I love my kindle fire. It works perfectly. It's a great size, video streaming from amazon, hulu & netflix is awesome. I love the games. And there aren't any bugs. it does EXACTLY what amazon said and advertised it would do. I'd bet the majority of people who returned one or weren't happy with it, didn't even read the product page, because that clearly states what the Fire is and isn't. If people didn't read that, it's their own fault.
    • Asha  •  1 mth 4 days ago
      I too like my kindle fire, I don't even know why they put it in a tablet category. If it had 3G capabilities, I might consider it a tablet. But for me I love reading books, flipping through magazines, watching movies, and playing with apps on my fire, and its like a mini entertainment center.
    • krazykarla  •  Pell City, Alabama  •  1 mth 3 days ago
      kindle fire is a great product never felt the need to buy the overpriced Ipad
    • who cares  •  Boston, Massachusetts  •  1 mth 3 days ago
      lol @ "Amazons Kindle Fire money making strategy is working" and linked to "all those cheap kindle fire tablets are hurting amazon profits"..

      nice conclusion..

      forst of all, you need to acknowledge your apple love then forget it and make an attempt at objective journalism..

      why not try to write your own informed article, ...you know..ask people their opinion like a real journalist would.. this cut/paste of other knee-jerk articles, guesses and supposition is kinda pathetic.
    • who cares  •  Boston, Massachusetts  •  1 mth 3 days ago
      Rebecca

      "Amazon loses money on the production of Kindle Fire" is supposition... do yourself, and editorial integrity a favor and dont quote a guess as fact huh?
    • Matthew  •  1 mth 4 days ago
      I like my Kindle, but I won't spend any money on content, but I just download free games and surf the web anyways.
    • Robert  •  Lafayette, Louisiana  •  1 mth 2 days ago
      "With its chintzy feel, slow interface and bugs, "
      i've had mine since christmas and its done everything i expected, and more. there is NO other tablet in the price point that comes close for out of the box performance and delivery [even if amazon tacked on $20 to make a little money].
    • Marie  •  1 mth 3 days ago
      I've had the Kindle Fire since it was released and I love it, love it. Much to Amazon's dismay, I'm sure, I've not spent a penny on content to date. I download books from the public library, download the music I already have stored on iTunes (which I despise, by the way), have gotten several cool free apps and stored away a few photos as well. Chintzy it is not, by no stretch of the imagination. Internet access is rapid enough to suit me. The only Apple product I own is a 5+ year old Nano to get me through my daily walks; my worth as a human being is not dependent upon being able to whip out the too-highly-priced iPad and impress everyone with my cool. I'm getting tired of these slams on a perfectly fine product. Ya gotta wonder how much Apple pays these folks to write such biased postings.
    • vjh  •  1 mth 3 days ago
      Is this woman talking about the same Kindle Fire I own? I love mine! I can't figure out why anyone would spend $500 MORE for an iPad!
    • Debbie  •  Atlanta, Georgia  •  1 mth 3 days ago
      Love my Kindle Fire.....don't see how it could be any faster,works beautifully...no complaints
    • Ryan K  •  Villa Park, California  •  1 mth 4 days ago
      just like videogame consoles. the money is made on the game sales, not the consoles
    • kumite  •  1 mth 4 days ago
      I'm not an apple fan and I love android. However, once you use a higher quality tablet and then use a kindle, you'll see what the writer's talking about. Android tablet prices are dropping so low now. The Asus memo 370T is a 7 inch android tablet with a quad core and running the 4.0 ice cream sandwich. It will only cost $249. This will be the fasted, smoothest running tablet out there and it's about the same price as a kindle. You could have downloaded an amazon app and a barnes and noble app and anything else you wanted and had it all for about the same price as a kindle.
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