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Amazon CEO Jeff Bezos. (Image credit: AFP/Getty Images via @daylife)

When Amazon refreshed its Kindle lineup for the holiday season a few weeks back, CEO Jeff Bezos made clear what everyone has known since the Fire came out last year: It's not a money maker at the prices Amazon charges. "Basically, we sell the hardware at our cost, so it is break even on the hardware," Bezos said. "We're not trying to make money on the hardware." But the reporting of this missed the point: Amazon's tablet business isn't designed to make much money from selling content either. No, really, it isn't.

Ever since the Department of Justice went after Apple, Amazon and the book publishers for price fixing, Amazon went back to setting e-book prices as it sees fit. Sometimes, that includes selling books below cost. (Hint: When you pay $9.99 on a current title, the e-book retailer is most often losing money or breaking even after paying the publisher.)

And it's not just books Amazon does this with. They often sell new music at a discount too, like their sale of Lady Gaga's "Born This Way" for 99 cents last year. Amazon also gives away free streaming video to Amazon Prime customers who pay a one-time fixed fee per year of $79 for unlimited 2-day shipping on all purchases. That's a lot of discounted content on top of discounted Kindle Fire devices. So what is the game?

Well, it's a long game, that's for certain. Basically, it's about keeping you as an Amazon customer, buying things from Amazon for a long time. As part of the deal, all the new Kindles come with "special offers", i.e. on-screen advertising. (You can pay slightly more for the devices to turn the offers off). And the best part? At least some of those are likely to appeal to you as an Amazon customer.

It's hard to explain to people that don't shop Amazon regularly so let me offer this perspective: I buy from Amazon about 3-4 times per month. I buy from them even if they don't have the absolute best price because I know (a) the price is good and (b) if there's a problem, they will take care of me. I've bought everything from a $2 item to a big-screen TV. With 2-day shipping, any item I order by Wednesday will be at my home sooner than I'd typically have it from brick and mortar because -- like many people -- shopping is typically not done until the weekend. Think about that last one for a second as discussion of same-day and 1-day delivery crops up.