Makes sense. Like game consoles, they make the money on the content.
But, unlike consoles, provided a kindle doesn't need the latest, fastest technology, they can keep getting cheaper, til it's negligible relative to the benefits of acquiring a customer.
Making money on the device directly is simple: You charge more for it. Keeping in mind that Amazon makes a pretty good margin on the content it sells with negligible infrastructure requirements (the kindle infrastructure would be negligible compared to the rest of Amazon.com + AWS), they don't need to make money on the device itself.
The company that uses the revenue model of making money of the device and selling the content for a negligible profit is Apple. That's how they run the iPod department for one. Devices are sold at a high margin but almost all the revenue for itunes sales go to the content providers.
Exactly my point, Amazon makes money on the content.
If it was viable to charge more money for the device, I'm sure they would but they need those (or some other) devices in people's hands. Therefore, they can't charge more for the device. That is my point, they don't know how to make more money with it without totally changing their strategy.
But, unlike consoles, provided a kindle doesn't need the latest, fastest technology, they can keep getting cheaper, til it's negligible relative to the benefits of acquiring a customer.