Kindle Fire Costs Amazon For Every One Sold, Say Analysts [Piper Jaffray Analysts Reveal That Amazon Likely Takes A Loss On Every Kindle Fire, Possibly To Get Content Buyers In The Door]

Posted on TFTS by Steve Anderson on Wednesday, 28. September 2011 under: Computers & Computing, PCs, Notebooks, Netbooks & Tablets

Having been following the Kindle Fire news for some time, I got to wondering about the value they were putting up with one of these. They’re half the price of an iPad 2, for crying out loud, and they’re offering plenty to go with it. But then the folks at Piper Jaffray started running the numbers, and what they discovered was a pretty big surprise: the Kindle Fire is a loss-leader for Amazon.

As it turns out, according to the analysts, Amazon likely loses about $50 on every Kindle Fire that gets sold. This actually makes some sense; they’re selling what amounts to an Amazon-branded Blackberry PlayBook, after all; it’s essentially a small Android tablet, and they’re selling it at half the cost of most of its contemporaries. But this actually shouldn’t be a big surprise as Amazon likely plans to make up that $50 loss by offering a large amount of content available via the device. After all, people who buy a Kindle Fire will likely have an interest in reading ebooks on the device, not to mention listening to music, watching videos or possibly even playing games, and they’ll discover that a great place (not to mention what will likely prove to be the most convenient while using the device) to find all of that stuff is, once again, on Amazon.

Basically what Amazon’s doing here is offering up a $199 monument to instant gratification, making the Kindle Fire a one stop shop to not only purchase Amazon content, but also use it in the same place. Couple this on to the also announced free trial of Amazon Prime, and you’ve got what amounts to a pocket Netflix…in your pocket.

The Kindle Fire will never make Amazon a lot of money, no matter how many they sell. But the likelihood that people will buy content for the device through the device more than makes up for that loss…or so Amazon hopes.

But what do you guys think here? Think Amazon’s making a smart play by offering up a discount way to not only access but also use content? Or is this a loss leader that will end up a plain old loss? Either way, we want to hear from you, (and don’t forget our Facebook poll about the Kindle you’re planning to buy!) so head on down to the comments section and tell us what you think!