The Kindle was not the Amazon.com (NASDAQ: AMZN) flagship product much of Black Friday. Perhaps that is because of suspicions that the world’s largest e-commerce site makes little or no money on the device.
The ability to buy the company’s e-books and read them on a large array of devices was the major homepage promotion at Amazon.com for the busiest shopping day of the year.. The company’s free reader apps for the Apple (NASDAQ: AAPL) iPhone, Microsoft (NASDAQ: MSFT) Windows, Mac, Research In Motion (NASDAQ: RIMM) Blackberry, iPad, Google (NASDAQ: GOOG) Android, and Windows Phone 7 are part of the company’s push to diversify away from the Kindle, if the homepage marketing message is any indication.
The ad even says, “Download and read Kindle books – no Kindle required.” It also remarks on Amazon’s 750,000 e-book titles, but even that is only in the fine print of the promotion.
Investors are concerned that Amazon has dropped the price of the Kindle so low that it is a loss leader for the firm’s e-book operation which is likely very profitable. The Kindle with Wifi only costs $139. The version with both Wifi and 3G retails for $189. Some experts believe the bill of material is greater than $100.
Amazon said on November 8 that starting on December 1 publishers will earn 70 percent of the retail price minus delivery costs for each newspaper or magazine sold in the Kindle store. But, the e-commerce firm has few if any costs beyond that. So, there is little question that the Amazon.com e-book library makes money.
Douglas A. McIntyre
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