Amazon's plan to sell its Kindle tablet devices at a loss to encourage purchases and recoup the money in future sales of digital media to the devices has yet to pay off after profits for its fourth quarter of 2011 plummeted by $239m.
This huge 57 per cent decrease in profits, from $416m in the same period in 2010 to $177m in 2011, came despite a massive increase in sales, which went up 35 per cent from $12.95bn to $17.43bn over the same period.
While the strategy to get as many devices into the market has yet to help the firm see a strong financial return, Amazon claimed shipments of its Kindle devices had risen by 177 per cent year-on-year.
But the firm refused to provide numbers on its Kindle sales, making it hard to compare it against competitors such as Apple's iPad 2.
Amazon's figures also include sales of its newly-launched Kindle Fire, which was not available in 2010, further masking the true extent of the sales.
Nevertheless, Jeff Bezos, founder and chief executive of Amazon.com, welcomed the increase in sales of the devices, which he said had strong both online and in the high-street.
"We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices, making Kindle our bestselling product across both the US and Europe," he said.
"Our millions of third-party sellers had a tremendous holiday season."
The firm also revealed that the Kindle Fire is the number one bestselling, gifted, and most wished for product on its site since its introduction last year.
On Tuesday Amazon also revealed insights into the huge growth of its S3 cloud storage service, noting that it now has three quarters of trillion objects stored on the platform.
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