There had been rumours that the Kindle Fire cost more to build than Amazon was selling it for, and that rumour is true. According to iSuppli, every one of those tiny tablets costs $US201.70 to build.
The display is the most costly component in the Kindle fire, costing $US87 to build. Other components, such as the RAM, battery and the case all cost around $US15-$US25. As for the lack of profit margins, Amazon losing money on the hardware isn’t particularly shocking, since they’ll just make it back in book/magazine/music/video sales (which as AllThingsD astutely points out, is the exact opposite of Apple’s approach to hardware and content selling). But it’s always a risk. [iSuppli via AllThingsD]
Kai Howells
Saturday, November 19, 2011 at 7:40 AMAnd you don’t think with Amazon’s supply-chain logistics that they’re able to wrangle a price that’s at least $3 better than that estimated by iSuppli?
Steve
Saturday, November 19, 2011 at 3:37 PMEven with economies of scale and lucrative deals, you still haven’t factored in costs of marketing, distribution, R&D on the device as a whole which need to be offset via each individual device sold.
Pranoy Ghosh
Saturday, November 19, 2011 at 11:46 AMWell this cost structure is employed by console makers, they sell the console at a loss and make a profit on the large markups on the games
TSH
Monday, November 21, 2011 at 10:42 AMThis. Get a lot of PS3s into homes, win the HD format war, make margin on media (games, BRDs, DLC).
Same approach, similar result. Probably better, given the relatively small loss-leading (1% isn’t that much to make up with sales of content).
Matt L
Sunday, November 20, 2011 at 2:25 PMAmazon is a book store…. They made this device to strengthen theirselves in the book market. A loss now, but pretty much locks people in for buying all their books from amazon in future.