How much is the Kindle costing Amazon?

Jeff Bezos warned Amazon shareholders yesterday that the Kindle e-book reader was not a "big cash flow generator for us".

In the meeting here in Seattle, the Amazon CEO instead characterised his digital books business as being in "investment mode".

The Seattle Times reports Bezos as saying, "If something is successful, it seems to take five to seven years or more before it's a positive contributor" to the company's profits. The Kindle, which launched in November 2007, is less than two years old.

Kindle costs over $200 to make?

Bezos also commented on a recent statement by market intelligence company iSuppli, which estimated that the Kindle 2 e-book reader cost around $185 (£114) to make. He said the retailer's manufacturing costs are actually "significantly higher".

The Wall Street Journal also speculates that Amazon is losing money on some book sales, with retailers typically paying about half the eventual retail price of $25-30 for a new release book. Amazon sells most Kindle bestsellers for $9.99 9 (£6.16).

Jeff Bezos told shareholders that where Amazon carries both the physical book and the e-book version, Kindle sales account for over a quarter of total sales of a title.

Recycling digital discs

Yesterday, Amazon also launched a trade-in service for DVD, Blu-ray and even HD-DVD discs. Customers in the US can simply pack up and post in second-hand discs (worth at least $10) to have the trade-in value applied to their account.

While premium discs like the Batman Anthology on Blu-ray can fetch prices of $35 (£22) or more, less reknowned discs like the 50 First Diates Blu-ray reflect their popularity, earning punters as little as $2 (£1.25).

Amazon is prepared to accept just 10 HD-DVD titles, with even the well respected Planet Earth box set worth just $9.25 (under £6).