Parts Cost Shows that the Kindle Fire Sells for Less than Cost – or Does it?
The gadget cost experts at iSuppli have just released their estimate of the parts cast for the new Kindle Fire. As we all suspected, the Kindle Fire is probably subsidized by Amazon and selling below cost.
Update: iSuppli released a new estimate yesterday. Now that they can see the guts of the KF, they think it cost around $202 to make.
But before you read too much into it, please remember that the experts at iSuppli have not seen the guts of the Kindle Fire so they don’t actually know what is in the Kindle Fire. There are so many wild guesses in this estimate that it might aw well be next year’s federal budget. In fact, I doubt that anyone who worked on those numbers has even been in the same room as the Kindle Fire. I’d strongly urge you to take these numbers with about a pound and a half of salt.
With that being said, iSuppli estimated that the Kindle Fire cost $191 in parts alone. Add in their estimate of the manufacturing cost and the total rises to #210.
I would guess that their estimate is probably on the low side, perhaps by as much as $30. But to be honest I do not know. In any case, we already knew that the Kindle Fire was a subsidized tablet.
Once I knew that it had a dual core CPU, IPS screen, and Gingerbread, I could pretty much guess that it was subsidized. Even if Amazon had stripped it down to the cheapest components possible, the software development cost, once factored in, would have been enough to convince me of the subsidy.
Oh yeah, that’s one detail that iSuppli can’t estimate. It’s a people cost, not hardware, so without inside knowledge it’s almost impossible to guess. But you can bet that it adds enough to the cost of each tablet that Amazon are probably taking a loss in the short run.
Of course, once they sell their millionth Kindle fire they won’t be taking a loss anymore. But I doubt that will happen for at least a couple months.