Now here’s a business plan. Make something cheap. Then sell it even cheaper.
IHSiSuppli counts this as a good strategy. “The Kindle Fire, and the content demand it stimulates, will serve to promote sales of the kinds of physical goods that comprise the majority of Amazon’s business,” it’s report says.
But it’s buy low, sell lower. Airlines tried this in the early 2000s, selling tickets below costs to grab market share. Mostly where it landed them was bankruptcy court. Amazon is rich enough to gamble, but pound for pound, the iPad is going to be hard to beat.