Kindle Fire Costs About $203 To Build, Teardown Finds
amazon.com’s Kindle Fire tablet appears to cost about as much or maybe a little more than it sells for — about $203 $202 — according to a teardown analysis by IHS iSuppli.
This essentially confirms what everyone has suspected for awhile, that Amazon expects to lose a little money up front on the $199 Fire in hope of selling large volumes. It also hopes to make more money on sales of digital media and physical goods that consumers may order from Amazon on the device.
Andrew Rassweiler, the IHS iSuppli analyst who supervised the teardown, said the analysis is still underway and that the firm may reduce its final estimate slightly. Update: It’s done: The final figure is $201.70.
That Amazon’s model with the Kindle Fire is essentially opposite that of rival Apple’s has been well understood for some time. Apple’s iTunes store runs at or slightly above the break-even point and encourages the sale of higher-margin hardware like the iPad, iPhone and iPod. The teardown study gives both a rough idea of how much Amazon can realistically expect to lose on the Fire, but also the extent to which it took steps to minimize those losses.