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Bezos: Kindle, Paperwhite Make No Profit

NEW YORK ( TheStreet) - Every time Amazon (AMZN - Get Report) announces a new Kindle tablet or e-book reader there are experts who believe the company is selling those hardware products as a loss-leader to get customers to buy lots of books, music and apps to fill up device memory. Today, Amazon's boss put half of that rumor to rest.

Amazon CEO Jeff Bezos, in an interview with the BBC, said his company's Kindle Fire and Paperwhite book reader make no profit. But, he insists that they do break even.

Bezos was interviewed at the launch of the company's new e-Ink-powered Paperwhite reader in the U.K., France and Germany.

The Amazon supremo believes his company's subscription services are the big difference. Especially the Kindle Lending Library. That's where you can borrow (up to) one book a month from a group of specially-selected titles. The Paperwhite's biggest competition comes from the similar Barnes & Noble (BKS - Get Report) Nook Glowlight and the Kobo Glo.

He told the BBC: "We want to make money when people use our devices not when people buy our devices." That's the polar opposite of how Apple (AAPL - Get Report) markets its goods and services. The Cupertino, Calif.-based firm has indicated that much of its profits come from hardware sales while its iTunes store operates at "slightly above break even." Manufacturers making devices that run on Google's (GOOG - Get Report) Android OS depend on hardware profits as well.

Bezos boasted that Kindle fans also read more books of all kinds. He told the BBC that Kindle owners read four times as many books - electronic and paper editions - as non-Kindle owners.

European deliveries of Amazon's new Paperwhite e-reader begin in two weeks.

--Written by Gary Krakow in New York.

>To submit a news tip, send an email to: tips@thestreet.com.
Gary Krakow is TheStreet's senior technology correspondent.

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