Amazon Selling Kindle Fire Tablets At Loss! IHS Reports
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November 19, 2011 •
Amazon Kindle Fire tablet is the cheapest tablet in the market so far with all its attractive beauties and amazing features. Amazon is selling its very first tablet “Kindle Fire” for $199.99 only.
Now a latest report by a research firm IHS iSuppli describes that the total cost to manufacture each tablet is about $201.70, meaning that Amazon is selling Kindle Fire at loss.
Notably, Amazon is one of the biggest online retailer in the world and it is expected that Amazon would succeed to sell about 3-5 million Kindle Fire units before the end of this year.
Also, a considerable decline in stocks of Amazon noted on Friday when Amazon shares fell $7.38 or 3.6% to close at $197.14 on the Nasdaq stock exchange.
According to IHS, Kindle Fire’s 7-inch screen is the priciest part of the device, which costs about $87 per unit. LG is the sole supplier of the Fire’s 7-inch screen, the company also makes the Barnes & Noble Nook Color and Nook Tablet’s 7-inch screens, and E Ink, and Kindle e-reader displays. While Texas Instruments is another major hardware partner of Amazon that is responsible to supply Fire’s 1-gigahertz processor at a cost of $14.6.
The TI OMAP4430 processor costs $14.65, accounting for 7.9% of the Kindle Fire’s total. However, TI also supplies other devices, including the power management device and the audio codec. This gives TI a total of $24 per each Kindle,” or 12.9% of the Fire’s build costs.
IHS also reveals that it has marked the OMAP4430 processor in its tear-downs of Research In Motion’s PlayBook tablet and the Motorola Droid Bionic and LG Optimus 3D P920 smartphones.
Amazon also tried its best to save some pretty bucks by eliminating a few important hardware parts like a camera, microphone, microSD card slot, HDMI port, 3G or 4G wireless radios which are the essential part of the rival tablets.
Contrary to existing best selling tablet in the market “Apple iPad” for which the manufacturing cost sets at about $326 per each unit, Amazon Kindle Fire is cheaper to produce at $201.70 only, but Apple sells its base iPad 2 at a huge price of $499.
The research firm came up with its cost-to-build estimate based on taking the Fire apart and pricing out each of the components inside. In Amazon’s favor to help it recoup some costs, if the IHS estimate is correct, is the fact that the company will likely sell books, music, movies, TV shows and apps to Fire owners through their use of the tablet, which is connected to the company’s online stores.
We think Amazon decided to bow the prideful head of Apple at any cost; even the company is not upset by selling its very first Kindle Fire tablet at loss.
Via: FreeP
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