Amazon Looks for Value in the Long Term with Kindle Fire

October 27, 2011, By Sanjeev Ramachandran

Amazon’s third quarter earnings were not really up to the mark, with its spending on fulfillment centers and Amazon Web Services.

The company has gone ahead and announced that it will not get better in the next quarter too, because of the launch of Kindle Fire at what could be called subsidized rates.

Yes, the $199 price tag of Amazon is definitely the reason for short-term profit hit, but the company is not worried. Amazon is happy with what the bigger picture looks like.

Kindle Fire will help the company big time, as those who buy the device becomes Amazon Prime subscribers, and purchase more of e-books, music and other physical goods. So it’s all about lifetime value of the customer.

As per what Amazon CFO Tom Szkutak says, the company thinks about the Kindle Fire in totality; the device, accessories and content.

The company is selling quite a bit of special offers devices, which include ads and thus they are thinking about those offers and lifetime values.

Once customers purchase a Kindle and are carrying around a really massive selection at their fingertips, they are buying more content – that’s what the company boss feels.

So Amazon is basically confident about what Kindle Fire can do for the company in the long run. Don’t you also think so?


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