Amazon Seeks Profit When People Use their Devices

November 11, 2012

Unlocking Word Meanings
Read the following words/expressions found in today’s article.

1. breakeven (adj.) 
[breyk-ee-vuhn] – having the same amount of income and expense in business, and not making profit
Example: The company did not make any money after its break-even deals.

2. built-in (adj.) [bilt-in] – made an important part of something
Example: The new e-reader has a built-in memory card slot.

3. media (n.) [mee-dee-uh] – means of communication that reaches a lot of people such as television or Internet
ExampleMedia make profits because of advertisements.

4. entice (v.) [en-tahys] – to make someone interested in something
Example: The product’s affordable price and design enticed people to buy it.

5. shipping (n.) [ship-ing] – the delivery of products from one place to another
Example: I paid a fortune for the shipping of books I bought in the US.

Read the text below.

Amazon CEO Jeff Bezos revealed that the sales of their newest Kindle e-readers will only be breakeven. According to Bezos, the company’s profits will depend instead on their software and online services.

The CEO talked about this strategy as the Kindle Paperwhite e-reader and Amazon’s e-book lending service launched in the UK, France and Germany.

Paperwhite has a built-in light, which Amazon hopes can rival other e-readers with a similar feature. In addition, Kindle users in Europe now have access to the Kindle Owner’s Lending Library.

This online feature lets users borrow one book monthly from authors who have released their works to Amazon’s e-library. The service’s UK database will have over 200,000 books at the start.

The e-library can be accessed if Kindle users pay for the Amazon Prime service, worth £49 a year.  The service entices customers to buy more by allowing access to the e-books as well as cheaper and faster shipping of physical products from the Amazon store.

Bezos says that Amazon wants to make money when people use their gadgets and not when people buy the gadgets.

He added that people read up to four times more after buying a Kindle, and people’s demand for media also increases once they own the device. Profit will depend on how much media customers will buy from Amazon.

Amazon’s strategy is the opposite of its competitors. Apple depends on the profit from its hardware products such as the iPad and makes a little more than breakeven sales from iTunes.  Google also earns more from sales of its Android tablet than from software.

Viewpoint Discussion
Enjoy a discussion with your tutor. 

Discussion A

·         Do you agree with Amazon’s strategy of making more money through online media services instead of their devices? Why or why not?
·         What other features can companies include to entice people to buy e-readers?

Discussion B

·         Why do you think people still buy printed books even though electronic books are available?
·         What are the advantages and disadvantages of e-readers?


November 11, 2012