On Bloomberg News this morning...
A British based company is making very low end tablets for India, the Indian gov. are going to subsidise them, but the cost of manufacture was stated in the region of £35.
The device shown may look a bit clinky conpared with a Galaxy, but the designers specificaly built it with the Indian market in mind, so it has 2 full sized USB ports for starters making it possible to use standard USB sticks or as the guy showed, add a full keyboad/mouse to make it a postable PC, not just a tablet.
They didn't say what CPU (just hinted it was slow by most standards) and ran Android 2.something, but for £35 what do you expect.
Anyway from that; I would not be so sure that a "book-read" from Amazon was not making a profit.