Amazon boss confirms Kindle sold at cost

Amazon's CEO Jeff Bezos has confirmed that it doesn't expect to make money out of its hardware selling it at cost to try and enourage users to spend online at its retail store

Amazon has confirmed a long known suspicion in the industry revealing that it sells its hardware at cost not expecting to make any money from its ereaders and tablets.

The online etailer told the BBC that it had a model that used the hardware as a way to get users to then go on to buy content from its online store of books, games and movies.

The advantage this approach gives Amazon is that its prices can be much lower than its rivals, including the market leader Apple, and it also encourages more customers to go onto spend money on its retail stores.

"We sell the hardware at our cost, so it is break-even on the hardware. We are not trying to make money on the hardware. We want to make money when people use our devices not when people buy our devices," said Amazon CEO Jeff Bezos.

Bezos was making his comments on the launch of the latest Kindle ereader, the Paperwhite, in the UK. Amazon's main competitor Apple is expected to shortly introduce an iPad mini.

Analyst expectations are for 10m iPad minis to be sold by the end of this year, following reports that the vendor had placed an order for that volume of units from  its suppliers out in the Far East.

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