Okay, it may have been one of the least, best kept secrets, but now it's out there in the open. Amazon.com CEO Jeff Bezos told the BBC that the company sells its Kindle devices at "cost."
For Mr. Bezos, the ultimate success of the Kindle depends on how many e-books, magazine subscriptions, movies, etc. are bought by the owners of the devices.
"We want to make money when people use our devices, not when people buy our devices," he told the BBC. According to Amazon's research, owners of Kindles increase their consumption of media after purchasing one of the devices.
The Amazon model is distinctly different than that of its rivals. Apple makes the vast majority of its profits through the sale of its devices while downloads of music, for example, deliver returns that are just above the break-even point.
Google, which provides its Android system software at no charge, relies on sales of third-party apps and media sales to make money. Android device manufacturers also need to make a profit on hardware sales.