The Kindle Fire, a 7 inch dual core tablet, has been selling quite well since it’s release late last year. Amazon has reported fantastic sales of the device, and it continues to be a hit in the tablet market thanks to it’s good performance at a great price.
Although the company expected to do well with it, they didn’t expect to do quite as well as they have so far. Thanks to a research study by RBC Capital, the Kindle Fire may be more profitable than previously expected, despite Amazon supposedly losing money on each tablet sold.
“Though Amazon actually eats a loss of an estimated $18 for every Kindle sold due to manufacturing costs and other factors, the company makes up for it through sales of ebooks and apps, according to the report. Based on survey of 216 Kindle Fire Owners, RBC analysts estimated that over the course of three years, each Kindle Fire sold could earn Amazon $136.”
Essentially, they’ll break even in less than 5 months says the report, courtesy of increased digital purchases of books, movies, and more.
“Amazon makes the most money off the Kindle Fire from sales of ebooks, according to the report. RBC estimated that each Kindle Fire owner purchases five ebooks per quarter, generating Amazon roughly $15 per user each quarter. In RBC’s survey, just 19 percent of respondents had not purchased an ebook for their device, while 29 percent purchased three to five and more than 28 percent bought more than six.”
Where they lose money on the tablet, they make it up with their other offering. Also, as hardware prices go down, so will the costs to create the device.
Do you have a Kindle Fire or plan on purchasing a tablet anytime soon?
