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Amazon selling Kindle Fire at $10 loss for each unit sold

Posted: , posted by Alan F.

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Amazon selling Kindle Fire at $10 loss for each unit sold
Last week, Amazon announced that it would sell its 7 inch Wi-Fi only tablet, the Amazon Kindle Fire, for $199.99. Many have speculated that Amazon is willing to take a loss on each tablet it sells, planning on making up the difference by selling tablet owners apps, content and cloud based services. But the question, is just how much of a loss is Amazon taking on each unit sold? Gene Munster, a Piper Jaffray analyst, calculated that the deficit is $50 for each Kindle Fire sold, but according to a breakdown of the tablet by IHS iSuppli, that estimate is way too high.

The component costs of the Amazon Kindle Fire

The component costs of the Amazon Kindle Fire

Working off a list of known and expected components, IHS iSuppli figured that each Amazon Kindle Fire cost $209.63 in parts and assembly meaning that Amazon is taking about a $10 hit on each tablet it sells, which sounds like a number easily made up by offering users other Amazon provided features. After all, a 1 year subscription to its Prime service costs $79 alone, for unlimited streaming movies. Just about every movie watched or note heard by a Amazon Kindle Fire user will come through the manufacturer.

As for the tablet, the most expensive part of the device is the LCD screen priced at $87 and the dual-core TI processor and other components to its mainboard added up to $70.40. IHS iSuppli figures that after selling users the content and other services, Amazon is actually turning a $10 profit on each tablet sold. And with the $199.99 price of the 7 inch device, you can expect that the Amazon Kindle Fire will be one hot-selling product this coming holiday season.

source: IHSiSuppli via electronista

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