Amazon began shipping its much-anticipated Kindle Fire tablet Nov.14, a day earlier of its original Nov.15 shipping date.

Let's analyze the lifetime value of the Fire device, not limited only to the market's heavy focus on the hardware unit.

There are some assumptions that Amazon is selling its tablet for a loss at $199, but it doesn't appear to be the case considering the long-term aspects of the device.

To be clear, we do not believe Amazon is selling the hardware unit at a loss and can only be profitable if there is an uptake of its digital offerings, Susquehanna Financial analyst Herman Leung wrote in a note to clients.

Leung said the lifetime revenue value of the Kindle Fire could be $384 with operating profit potential of $56, implying 14.7 percent operating margin for Amazon. This is significantly higher than just the $199 device sale and much higher than its 2.7 percent operating profit estimate this year.

The analyst have factored in eight different Kindle revenue stream opportunities, which include the hardware, e-Books, videos, music, advertising, accessories, Web services, and prime membership upsell opportunity.

The hardware portion has already been well documented by several bill-of-materials (BOM) analyses, but the breakeven to slight profit assumption is predicated on his assumption that volume discounts are not incorporated into BOM estimates.

We think the digital offerings should drive margin upside as digital adoption grows into 1H12, especially as its install base of the Kindle Fire continues to grow, Leung wrote.

The analyst expects this installed base of users to start purchasing a variety of digital media services including e-Books, video and music on the device, which all carry higher profit dollar opportunity than just the hardware device alone.

On the advertising front, Google could be paying a large up-front royalty payment plus traffic acquisition costs (TAC) rates of 85-95 percent for each advertising click-through for the Amazon Fire.

Recall the Google default search placement on the iPhone was widely speculated by industry sources to be worth $100 million plus the industry standard revenue sharing rates (Average 80 percent plus).

We think searches on the Fire are now revenue potential events, which could generate incremental advertising dollars, potentially lowering the price point over time, said the analyst.

Accessories could also be a big opportunity for the Kindle. The analyst's checks with sellers of cell phones and tablets suggest the Kindle Fire could see a 25-30 percent attach rate for each device, suggesting incremental sales opportunity with high margin products.

Web services are also being introduced to consumers in the form of its cloud service offerings through storage, where consumers can upload and store media not purchased through Amazon in the cloud.

Prime membership is also included for one month with the purchase of the device, which is a brilliant strategy because of all the content its users will be able to experience first-hand with the device, whether through the Kindle book-lending library or through its growing library of streaming content.

Finally, Leung, who has a positive rating and $260 price target on Amazon stock, said he did not even incorporate revenue sharing from applications (generally 40/60 or 30/70 split), which could offer significant margin opportunity should adoption for the device continue to grow.

Thus, Amazon may be selling the Kindle Fire hardware at a loss, but the strategy may boost its bottom line through its marketing strategy and strong content.