Amazon's Kindle Fire e-book reader tablet costs more to manufacture than the online retailer is charging punters for it. According to a take-apart conducted by market watcher iSuppli, the bits inside the Fire total $201.70. That comprises $185.60 for the parts, $16.10 for Amazon's contract manufacturer to put them all together …
I saw an iSuppli article on the PS3 and this was being sold at a loss, I guess it's common practise to keep tech gadgets under a certain price threshold.
Keeping the Kindle Fire under $200 (at $199) is a good number, it certainly makes the Galaxy, iPad and others seem al little over the top if people just want an e-reader with a few select extra features
The money certainly is in the content.. and yes, the Kindle Fire will also balance the books too!
I'm sure you've noticed how overpriced PS3 games are. Part of the problem are the high royalties Sony charges developers, precisely to subsidise their losses on the hardware.
Since Amazon controls so much content across so many platforms - and I'm sure they won't be selling a Kindle Fire versions of that content at higher cost - I'm not so pleased this means all of us will end up paying essentially a Kindle Fire tax to subsidise those owners.
I'm always a bit puzzled about these "it costs so-and-so much to make" sort of teardown reports.
Mainly because I'm curious about where they get their cost figures from. Do they actually know what Amazon (or Apple or whoever) are paying their suppliers for components, etc? Or is it based on what the person producing the report would have to pay if they shopped around their suppliers or local box shifters or whatever? Or is it based on some kind of industry average/minimum data for particular components (or types of components).
The main reason I wonder about this is that, unless the cost data is coming from the first source (i.e. the people who actually really know what they're paying to have these things made) then the entire report is just so much speculation and hot air really. And while I'm sure that it is possible to get the information from the primary source (by fair means or foul), I also know that such financial data and details would normally be regarded as "Commercial - In Confidence" (or similar) by most companies (and their supply-chain partners) and isn't normally disclosed.
I'm more than happy to be enlightened if anyone can tell me where the numbers are coming from and whether there's any point in actually believing a word of these things.
Having worked in the evil commercial space for a while, I used to see these tear-down reports, using some of the same parts I was using. Now I wasn't using anywhere near the volumes of some of the things that were being talked about, but I was buying the parts cheaper than the quoted prices.
It might be the case that they are better at it now, and do have realistic prices that OEMs pay for the parts, but I doubt it; otherwise almost every electronic thing I own cost more to make than I paid for it, and I don't see how Samsung or Panasonic make any extra money on the TV or DVD player I bought from them.
They make an educated guess, because Amazon will NOT be letting those numbers out to all and sundry. What you pay for stuff is a pretty well guarded secret. The companies that makes chips won't want to release numbers as that can be a bargaining point for other buyers. Amazon won't want to release numbers either for similar reasons - other tablet people would them be able to argue for better discounts from suppliers.
Amazon will be getting a huge quantity discount on this stuff.
In this case I think their (iSuppli's) guess is a bit out.
It's great to have so many EE experts on this thread.
So where can I get my hands on the OMAP4430 for the $14.65 listed here
Don't mind smaller quantities.
I thought this whole article was debunked back in August?
Not sure if it was the same people (re-reporting old news) but the estimated prices look very similar.
However someone as Amazon said they were making around $30 to $50 profit on each one. That's not a lt of profit per unit, but Amazon want to sell lots of them.
Completely agree, adrianww
No-one knows where the stupidly named iSuppli gets its numbers from, so they must be treated little more then barely informed guesses.
As you say, such supply chain information is indeed confidential, but I can tell you on good authority that the Kindle Fire costs less than $202 to build.
I don't get why sites like this one continue to give iSuppli any oxygen at all.
I can tell you on my good AC authority too that the Kindle Fire costs even more than $202 to make, and that's before even adding in the necessary patent licensing costs. Plus all the other costs mentioned in the article.
So, dear reader, feel free to pick your AC.
Re: pick your own AC
Fair point, but given the choice between "massive company is deliberately losing money" and "massive company screws good deals out of suppliers", I'll go for the former.
granted it is some time since I saw a commercial invoice but a company can usually get a substantial Discount just for paying up on time in this instance 28% if paid up within 14 days 15% if paid up in 30.So if this is still the case making a product for a nominal loss could mean in fact a 20% profit.
I find it very odd that no one has mentioned (or even remembered) how Apple views iTunes and the App Store.
If you read all the industry reports and earning calls, Apple sells hardware. The App Store and iTunes merely reinforce the ecosystem (hate using that term) that drive a future sale. They've even said that the ecosystem is pocket change to the wider business of selling kit.
But then we have Amazon, who are making a loss leading Fire who will be driving their full ecosystem (shoot me) to make up the sales to cover the loss they are making on the hardware.
If Apple are failing to make serious amounts from the ecosystem (bleh), then why should Amazon succeed?
And why should Amazon succeed on a product that is a cheap and nasty like the Fire, when they have the perfectly acceptable Kindles which have been good sellers in the past, that do have a large following (remember the hullaballo about iPad screens and reading in the daylight??), and the fact Kindles (non Fire) probably do make money?
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