I'm still not following the argument. Google producing tablets is a positive externality for Amazon. The Amazon app store, Amazon MP3 store, and Kindle app run great on any android tablet. The Amazon Fire was the catalyst of the sub $200 tablet revolution.<p>As far as subsidizing the tablet further, my guess is that Amazon Prime subscriptions will subsidize all Kindles. If you are a Prime member, you get to buy 1 Kindle a year at a subsidized price. Stats have shown Prime members to buy more things from Amazon.
Is it just taken as fact that Amazon is losing money on each Fire sold? Last I remember, there was a device tear-down that priced the components at slightly over the retail price, but I wouldn't have said that was definitive proof that Amazon was losing money. And even so, they're still producing and shipping Fires, which means they've had time to improve the production efficiency and bring down costs.
TL;DR: As tablet prices fall, Amazon won't be able to subsidize the tablet price in expectation of digital purchases by the increasingly frugal tablet purchaser.<p>Interesting assertion, but I'd bet on Amazon knowing their numbers better than Mike Elgan (who? the author of the article).
It's hard to see the downside for Amazon here. If other manufacturers started selling great, cheap tablets, so much the better for Amazon. That's more people with easier access to Amazon's media empire.