Amazon's Kindle Fire Shows That Device Sales Isn't The Only Way To Make A Profit

Like with so much else Amazon does, profit comes second to bringing in users. That’s especially true when it comes to the Kindle Fire. The tablet will never be the most popular one out there, and Amazon has admitted that they sell the devices at cost. But that’s not really the point.

Instead, Amazon generates revenue from Kindle Fire users by encouraging them to download from Amazon’s vast digital library of apps and media, view ads, access related Internet services like e-commerce, and join its Amazon Prime all-in-one loyalty service. This is an important model that the tech industry should be paying attention to: Amazon’s Kindle Fire shows how you can deeply discount your hardware, lag behind competitors in terms of market share, and win in revenue terms. There are signs Google-owned Motorola may be moving toward a similar strategy with its inexpensive $US179 Moto G smartphone.

In the future, most hardware may intentionally be sold at cost or for a loss in order to encourage uptake of online services, advertising, and commerce. In a recent report from BI Intelligence, we dig into available data on Amazon’s unique mobile strategy. Amazon has achieved respectable results in terms of app downloads and app revenue on Kindle Fires, and yet is often left out of mobile platform analyses that focus on Apple, Google, and Microsoft.

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Here are some of the key numbers behind Amazon’s Kindle Fire ecosystem:

The report is full of charts and data that can be easily downloaded and put to use.

In full, the report:

For full access to the report on The Amazon Kindle Ecosystem sign up for a free trial subscription today.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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