Amazon Really Does Lose Money On Every Kindle Fire HD

Amazon Really Does Lose Money On Every Kindle Fire HD
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Fresh on the heels of an iPad mini teardown that revealed $US188 worth of components, IHS has pegged the Kindle Fire HD bill of materials at $US165. That means that only about 20 bucks’ worth of hardware separates devices with $US130 price tag differential. Yeesh.

It was no surprise that the Kindle Fire HD was at best a break-even proposition for Bezos & Co, but that $US200 price tag looks even more unhinged when you consider all the research and development and marketing costs that aren’t counted in that $US165 figure. Consider that there’s a $US141 gap between Apple’s iPad mini bill of materials and its sticker price. That distance, for Amazon, is just $US34.

Microsoft, meanwhile, rings up a $US271 components bill for every $US500 32GB Microsoft Surface it pumps out. That gap makes sense especially given Microsoft’s lack of a wildly profitable content business, which is how Amazon justifies its kamikaze Kindle pricing. Microsoft’s advantage is even more pronounced when you factor in its Touch Cover, which retails for $US120 when bought separately, and contains about $US16 worth of parts. [AllThingsD]