>I know I picked on Amazon a bit here and that's just because the Kindle Fire is being sold at cost below the competition. First of all it's not clear Amazon i

>I know I picked on Amazon a bit here and that's just because the Kindle Fire is being sold at cost below the competition. First of all it's not clear Amazon is losing money on the Kindle hardware. But even if they are they seem to have adopted the console model - I give you subsidized hardware and then you pay through the nose for content. They are not going to lose money in the end even if they do lose money on the hardware. Ask anybody who has one of the old Kindles how much they spend on ebooks compared to what they used to spend on dead trees. The impulse buy will get you every time. And that's a perfectly reasonable and sustainable business strategy, provided not too many people root their kindle and use it for something else. Amazon lost money last quarter because they made some questionable acquisitions and because they're in the process of expanding into new markets (like film production), not because they're dumping hardware below cost.