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Now with Amazon releasing the Kindle Fire at such a low price point, many are speculating that they are selling it at a loss. This is very possible, considering the cost of engineering and parts.

Regardless, this is actually an excellent business strategy. Amazon is one of the largest online retailers in the world. If they release a tablet at a price point of less than half the cost of other tablets, they will more than likely be able to sell many of these tablets. Once the tablets are in the market, they can make up the loss by selling services and digital items such as books, and SW.

This strategy has been used well for years by game console makers Nintendo, Microsoft (Xbox) and Sony (playstation). It is a strategy that HP should've thought about before releasing their TouchPad.

It will be interesting to see if this strategy that has done well in the gaming arena, translates over to tablets.