The Orange View (on hiatus) Because Apple is great but it isn't perfect


Amazon’s tablet innovation will be the price

Tech analyst Tim Bajarin is hearing some details about the Amazon tablet -- more a hyper-Kindle than another me-too iPad wanna-be. But, of far more interest, Bajarin says the biggest innovation may be in the business model Amazon will use to sell the tablet at a slight loss ($249 price on $300 cost).

Say that Amazon did some research and determined that over a two-year period, a person with an Amazon tablet might buy or rent 15 movies, stream or download 50 songs, buy 18 books, and pay $5 a month for cloud storage from Amazon. Then let's say they also purchase five items through the tablet’s Amazon store; that can be counted against a two-year amortized profit curve. And lets throw in some advertising in this mix as well. Although the prices of the books, video, music, etc would vary, by my guestimates, Amazon would make back that lost $51 within six months and reap a profit of anywhere from 10 to 30 percent on the tablet over the last 18 months of the device's accounting period., August 8, 2011 (via the KindleWorld blog)

Posted by Aaron Pressman

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