Kindle Fire not all that expensive to produce
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When Amazon officially revealed their Kindle Fire tablet last week, the suspiciously low $199 price tag led some analysts to speculate that the company could be selling the device at a loss that may reach up to $50. Now in an attempt to get to the bottom of the story, the folks over at iSuppli performed a complete teardown calculation and reached the conclusion that the device is indeed being sold at a loss, but not as much as was previously thought.
According to the company’s report, the total bill of materials for the Kindle Fire sets Amazon back around $191.65 per tablet. However, after factoring in manufacturing expenses the total price of the tablet reaches $209.63, or around $10 more than the device’s retail value. Furthermore, iSuppli estimates that when all is said and done, Amazon may only end up profiting around $10 per tablet including expected digital content sales.
While Amazon may not be aiming for high profits on their Kindle Fire, they do expect to generate overall revenue by promoting their digital content (movies, e-books, music and apps) along with stimulating sales of other physical goods on their store. Though the strategy is a bit unorthodox for the tablet market, it isn’t the first time Amazon has gone down this road and succeeded, as they employed a similar strategy with the Kindle e-reader, where e-books were purchased for $13 from publishers and sold for $9.99 in order to gain market share.
The Kindle Fire features a 7" IPS display, a dual-core CPU, 8GB of internal memory and a heavily customized Android UI. The device is currently available for pre-order from Amazon, but won't ship till the 15th of November.