The author of this piece misses something. There's a large slice of the market that simply does not wish to do its book-reading on a bulky tablet. There will always be a need for a compact dedicated eReader, and Amazon will be well-advised (from a media sales point of view) to service the hardware needs of that base, even if it does so at cost, in addition to owning the software ecosystem.
Ron Adner: Kindle's Days Are Numbered -- Long Live Kindle: "Ultimately it matters little to Apple's bottom line if their bookstore effort fails. The company still makes the majority of its profit on hardware, not media, sales. But Amazon, which started off as a bookstore, still retains strong roots in the sector. With Amazon.com Jeff Bezos introduced online bookselling to the mainstream; the Kindle app is on track to do the same for digital bookselling. Now that other companies are entering the digital reader space, it would be a mark of success, not weakness, if Amazon can exit the hardware business entirely."
