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Amazon to Sell Kindle Fire Below Cost

According to a teardown conducted by IHS, the fire has a bill of materials (BOM) of $191.65. However, that does not include the cost of assembly. Including manufacturing, each Fire is estimated to cost Amazon $209.63. And even that price does not include shipping and secondary cost such as R&D and marketing and PR. The actual cost of the Fire on Amazon's balance sheet may be much closer to $225 per unit.

IHS said that even if the sale of digital content is factored into the cost/revenue equation, Amazon is likely to make a marginal profit of just $10 on each Fire sold. However, Amazon's interest with the Kindle Fire is not to make profits of hardware or digital books anyway. IHS noted that what Amazon really wants is to get Fire users to "buy shoes, diapers, and every other kind of physical product imaginable." Amazon's retail business generated $34 billion in sales in 2010.

According to the market research firm, the most expensive component in the Fire is the $87 touch screen, followed by a $15 applications processor. IHS said that it will be providing a detailed teardown in the near future.

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  • shloader
    So if we all get one and start shopping on NewEgg :-p
    Reply
  • cuecuemore
    Lulz!! Brilliant move!
    Reply
  • halcyon
    Very smart move indeed
    Reply
  • kcorp2003
    this what i said.... http://youtu.be/9TXd0GhSGUs?t=40s
    Reply
  • sgtopmobile
    i am gonna be honest i prefer 10000 times buying computer parts in amazon than in newegg, i find better prices in amazon and all products sold by amazon itself has free shipping.
    Reply
  • Hellbound
    If this becomes a successful product, Apple will make up a reason to sue Amazon..
    Reply
  • aaron88_7
    sgtopmobilei am gonna be honest i prefer 10000 times buying computer parts in amazon than in newegg, i find better prices in amazon and all products sold by amazon itself has free shipping.Free shipping through DHL which takes forever as is probably going to have a few bumps by the time it gets to your door.

    I'll stick with NewEgg, never had anything take more than 2 days to get to my front door.
    Reply
  • I am so glad we have an expert who can tell the cost without ever seeing the product or even knowing what is in it. All the info they have are a few key features.
    M
    Reply
  • killerclick
    You can buy everything you want on Amazon even with a dumbphone.
    Reply
  • jrharbort
    And by rooting it, you can have yourself an amazingly cheap Android tablet for just $200. That's not bad at all.
    Reply