Amazon has confirmed that they're selling the Kindles at cost hoping to make it up on content. Third parties have done calculations on the Kindles and found the parts and assembly to be higher than the selling price (without taking into consideration things like shipping, warehouses, credit card fees, etc.). Amazon is being above board in saying that they're hoping to make their money back via content.
In terms of the P/E thing, I only brought it up because of how some investors justify Amazon's price. Some investors believe that Amazon will be able to get large market power in certain industries (maybe retail, maybe e-content) and then charge higher prices to get fat margins at the expense of consumers. I don't think that's in Jeff Bezos' ethos (to his credit). However, cornering a market is a strategy that companies have done.
Amazon has confirmed that they're selling the Kindles at cost hoping to make it up on content. Third parties have done calculations on the Kindles and found the parts and assembly to be higher than the selling price (without taking into consideration things like shipping, warehouses, credit card fees, etc.). Amazon is being above board in saying that they're hoping to make their money back via content.
In terms of the P/E thing, I only brought it up because of how some investors justify Amazon's price. Some investors believe that Amazon will be able to get large market power in certain industries (maybe retail, maybe e-content) and then charge higher prices to get fat margins at the expense of consumers. I don't think that's in Jeff Bezos' ethos (to his credit). However, cornering a market is a strategy that companies have done.