Based on hardware alone, the Kindle Fire isn't particularly profitable. Amazon may not sell it at a loss, but it's estimated that it only brings in a few dollars for each unit sold. When marketing is taken into account, you could say that the company (roughly) breaks even on hardware. However, it doesn't take a genius to see that Amazon has a profitable device in its hands nonetheless.
The Fire prominently features Kindle books, Amazon MP3 music, Amazon's AppStore, Amazon Prime, and, of course, the Amazon online retail store. People are more likely to interact with something that they see every day, and the Kindle Fire takes millions of customers on a daily trip to a virtual Amazon shopping mall. This is where the real profit lies.
One analyst, however, believes that the profit margin for each Kindle Fire is actually a bit higher than was previously thought. Ross Sandler of RBC Capital sees "frequency of digital goods purchases" as outweighing investors' expectations. His conclusion comes from a survey that he conducted of 216 Kindle Fire owners.