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Kindle Fire Costs Amazon $201.70 to Build

By - Source: Tom's Guide US | B 14 comments

Amazon's bill of materials (BOM) for the $199 Kindle Fire is estimated to be $185.60 -- below a previously stated $191.65 -- but increases to $201.70 if assembly cost is included, according to a report released by IHS.

"The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point," said Andrew Rassweiler, senior director, teardown services for IHS. "Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle. This is a similar business model to wireless companies such as AT&T or Verizon. They sell you a phone that costs them $400 to $600 or more to make for a price of only $200. However, they expect to more than make up for that loss with a two-year service contract."

IHS said that Amazon surprisingly uses an "unfamiliar source for the touch screen controller integrated circuit", Ilitek, as well as a wireless local area network (WLAN) module from previously unknown supplier called Jorjin.

Texas Instruments (TI) scored major design wins in the Kindle Fire as it supplies the OMAP4430 processor for an estimated cost of $14.65, the power management device and the audio codec. IHS believes that TI's revenue per Kindle Fire is about $24 per each Kindle, or 12.9 percent of the BOM. The OMAP4430 is based on a dual-core ARM Cortex-A9, 1GHz architecture, which includes the IVA 3 hardware accelerator and a SGX540 3D graphics core.

If you want to know more about the Kindle Fire's insides, check out iFixit's teardown.

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  • 1 Hide
    de5_Roy , November 19, 2011 3:08 PM
    lol imagine negotiating with intel to deliver an soc at that price!
    amazon seems to be cutting it a bit close. i guess they'll make bigger profits from content sales and subscriptions.
  • 0 Hide
    rohitbaran , November 19, 2011 3:30 PM
    __-_-_-__This is a great deal if can be hacked

    I think that Fire has been rooted.
  • 1 Hide
    hetneo , November 19, 2011 3:42 PM
    __-_-_-__This is a great deal if can be hacked

    It was rooted 2 days after sales started. You can find that news here somewhere, I think it's from day before yesterday or day before.
  • Display all 14 comments.
  • -4 Hide
    homerhellboy223 , November 19, 2011 5:53 PM
    Actually that's your dick, not amazon
    amk-aka-PhantomGod.... can everyone STFU about Kindle Fire?! Amazon products somehow always get 10x the attention despite the fact that there's nothing outstanding about them.

  • 5 Hide
    joytech22 , November 19, 2011 7:51 PM
    homerhellboy223Actually that's your dick, not amazon


    So do Apple's products. :\
    "Oh look, a new shiny came out this year, better get it"
  • 1 Hide
    joytech22 , November 19, 2011 7:52 PM
    ^My previous post I was supposed to quote amk-aka-Phantom, not Homer.
  • 2 Hide
    santfu , November 19, 2011 8:05 PM
    but at least amazon are clearly not raping their consumers....
  • 0 Hide
    zybch , November 19, 2011 9:36 PM
    These teardowns ALWAYS ignore the economies of scale that take effect when producing simply enormous quantities of a product.
    Sure, it might cost 201.70 to build a few thousand, but amazon is having 5 million made, and that kind of volume WILL drastically reduce the price.
    Its the same as if you bought all the parts from Ford (or whoever) to build your own car out of original parts, thats going to cost you 4-5 times as much to build the car as it does the original carmaker.
  • 0 Hide
    proxy711 , November 19, 2011 9:53 PM
    zybchThese teardowns ALWAYS ignore the economies of scale that take effect when producing simply enormous quantities of a product.Sure, it might cost 201.70 to build a few thousand, but amazon is having 5 million made, and that kind of volume WILL drastically reduce the price.Its the same as if you bought all the parts from Ford (or whoever) to build your own car out of original parts, thats going to cost you 4-5 times as much to build the car as it does the original carmaker.

    Still doesn't change the fact that they aren't making much on the tablet and relying on other sources of income from the device to make profit. Which isn't new, consoles have been doing this for ages. Sell at a loss, gain money from developers making games for your product takes some but you'll make money if it doesn't fail early on.
  • 1 Hide
    Anonymous , November 20, 2011 1:13 AM
    Amazon is in the content business and that is what they are selling. The difference in cost versus price for the Fire is an advertising expense in the context of their business model. Regardless at $200 the Fire is a value purchase for consumers, no it is not an I-Pad and yes it is missing some features that you can easily find if you want to pay more for a different product. Day 4 and I am happy with my purchase and how much Amazon makes or loses on the sale does not Fire up my interest. I paid $200 and am happy.
  • 0 Hide
    nhat11 , November 21, 2011 1:25 PM
    santfubut at least amazon are clearly not raping their consumers....

    Eh the costs does not include R&D, shipping, advertisements, licensing, etc. They're loosing a lot for each sale.
  • 0 Hide
    wydileie , November 21, 2011 5:07 PM
    They may be losing a lot of money right off the bat, but R&D and advertising costs per unit decrease with more production. They have already succeeded where so many other companies have failed, to market and release a tablet that can sell unit for unit with the iPad in volume. Sure, it isn't as powerful a unit as the iPad, but if it has the right apps, and a good browsing, movie and music experience, that is all most consumers care about. If they can get that experience at $300 less then the baseline iPad, all the better.

    Not to mention, with this swift stroke with the Kindle pricing they have all but eliminated B&N from being able to compete at this point, which I think is more important to them in the long run. If they can get B&N to go belly up so the Nook is no longer an option, any costs they incur now is definitely worth it as they would pretty much have monopolized the industry.
  • 0 Hide
    eddieroolz , November 22, 2011 5:41 AM
    Well they've sold millions already, so that's a solid user base that's now going to be buying music, books and apps in big numbers.
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