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

After breaking down the Amazon Kindle Fire, IHS iSuppli says that the actual cost of to build each unit is $10 more than the $199.99 price that Amazon is asking for the 7 inch tablet; the manufacturer is willing to take the loss so it can profit from selling apps, content and cloud services to tablet users...
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18 Comments

1. dacastrator

Posts: 232; Member since: Sep 22, 2011

Sure the price is jaw-dropping. But that's what will happen if you try hard to be revolutionary. Or atleast different. Other 7 inchers are roughly $300. Not so clever Amazon.

8. Lucas777

Posts: 2137; Member since: Jan 06, 2011

i agree witht he fact that 7 inches is bad... but the price point is good... personally i think amazon could take a further price cut.. think about how much marketing this will get being on the fron page of amazon every day

9. oddmanout

Posts: 443; Member since: May 22, 2009

You all talk like Amazon doesn't know these things. I'm sure Amazon's strategy will work for them. They can either come into the tablet game with a fluke or a bang for every buck. They chose the ladder. Have we not learned from HP and the TouchPad? They came into the game with an overpriced tablet losing much more revenue with a flawed strategy. If the price isn't right for new products, people will question to take a chance. This strategy might lose them some money but its also going to practically guarantee millions of units sold. This will guarantee a substantial boost in app purchases, music purchases, books, movies, etc. throughout the amazon market, which will far surpass the $10 that Amazon will be losing for each unit. Think outside the box. This is nothing but clever.

14. shafboy

Posts: 179; Member since: Sep 26, 2010

I agree, they aren't dumb obviously. They are already massive and I'm sure they know what to do.

15. remixfa

Posts: 14605; Member since: Dec 19, 2008

exactly. They make the bar for entry really low, they make the device stand out and be really enticing, and they have an apple style lock on it where all purchases go through them. It will be on the front page of the amazon store until the next version comes out, and more than likely will be the highest selling android tablet by far because of that. Concidering its still a dual core tablet, im sure XDA will make good use of it and turn it into a cheap honeycomb/ICS tablet in no time, just like they did with the nook color. Amazon knows what they are doing. This is probably the most thought out custom tablet launch yet.

2. agentoj

Posts: 105; Member since: Oct 29, 2009

$200 for a decently fast tablet is great! Other sub $300 tablets do not have the support Amazon is willing to put into its tablet. I would say the Silk browser looks like ti will be ridiculously fast. Good stuff

3. dacastrator

Posts: 232; Member since: Sep 22, 2011

It definitely is. But they will get shot. Bankrupt.

4. belovedson

Posts: 1061; Member since: Nov 30, 2010

it will be one of the hottest sells come christmas.

5. skymitch89

Posts: 1453; Member since: Nov 05, 2010

Thought they will be losing $10 per unit, think about how much they'll be making on the books, magazines, and other stuff they they'll be selling from it. Especially if they offer e-versions of college books.

6. Habib

Posts: 114; Member since: Feb 26, 2011

LOL, sell 1 million kindle fire, and u lost 10 million :). But, jus price it at 219.99 you gain that 10 million and i promise, I, as a middle low class spender, i would not care for the $20 bucks different. if i can get android apps from amazon app store

7. twenti7

Posts: 152; Member since: Jul 09, 2011

You personally might not mind paying an extra $20 for a decent product, but after working 4 years in retail environments (including Toys R Us and Radio Shack), I can assure you that is not the case with the majority of consumers. They see the $199 price tag, and even tho it's pretty much $200, simply by having a 1 at the beginning a product will sell significantly better. And while most consumers don't like spending very much initially, they are more likely to spend more money after purchase if they feel like they got a good deal on their initial purchase. Manufacturers know this, and it is a very smart move on Amazon's part. Yes, they will lose money initially, but they will quickly get it back and will likely end up making plenty of money in the end.

17. remixfa

Posts: 14605; Member since: Dec 19, 2008

lose a nickel up front to make a dime in the end. exactly

10. InspectorGadget80 unregistered

Amazon will eventually gain lots of profit after they launch their product even if it's only 10$. Their Kindle is the #1 book reader

11. bossmt_2

Posts: 459; Member since: Oct 13, 2009

This tablet will sell, the question is will they make money, if they sell a million tablets they need to make 10 million bucks in books, mp3, and apps. Basically they need every consumer to spend on average 25 bucks, which if all they do is convert kindle users to Kindle Fire users I'm sure they will be fine. I think the key with this is to stop the bleeding of people leaving the kindle for the Nook Color and regular tablets. it comes in at 50 bucks cheaper than the Nook color and it's better branded IMO.

12. RORYREVOLUTION

Posts: 3131; Member since: Jan 12, 2010

This is going to out sell every android tablet there is and then some. Yes 7 inches might not be 9.7 or 10.1 that we all love and expect but this is great thinking on Amazon's part. They want to see how well and fast this little guy sells and if it is successful which I know it will be. Later on down the road they will then sell a larger, better spec'd, and more expensive version. But even that I expect to be no more than 300-350 which is still much cheaper than the 500-600+ the other tablets are.

13. jemolian unregistered

Amazon would probably be getting a cheaper price than listed since they require large quantities, so should it be more than $10 ?

16. dashak unregistered

This. Amazon buying bulk parts would yield a discounted rate. Plus, these figures are being extrapolated from a source that ISN'T Amazon itself. Who's to say they didn't work a deal with a given supplier. I sincerely doubt they're taking a $10 loss on each tablet sold.

18. gamma unregistered

They dont expect instant profit from the unit sold! Its just to start hooking the user to the amazon service, where the real business will began...
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