Amazon Kindle Fire Could Cost $150 to Make

Since the launch of the Amazon Kindle Fire, some have speculated (and calculated) that Amazon is losing $50 per tablet sold. More numbers have now been calculated that indicate Amazon is actually making $50 per tablet sold.

Amazon is working a little different to other tablet makers. If you remember back a month or so ago when HP closed down webOS hardware and shipped its tablet out for $99 each, they sold out within hours it seemed. This made a point that the way tablets can compete is by tackling the lower end of the market, meaning the lower end in pricing. Although Amazon is charging $199 for each tablet this still falls in to the low budget end and because of that, the company will see success.

Numbers calculated by TechInsights hint that the Kindle Fire costs $150 to build while the PlayBook by RIM costs $160 (16GB model) and the 3G 32GB iPad 2 costs $270 to build. To get the price lower Amazon has used a smaller screen which is $20 cheaper than the iPad 2 screen. There isn’t as much storage in the Kindle Fire which also reduces the price. By selecting to only have WiFi the company can also lower the price a little more (although note that there is a WiFi only iPad 2 as well).

Due to the cut down RAM, WiFi only and smaller screen, Amazon is able to sell the Kindle Fire cheaper. They also don’t make as much profit per tablet in terms of buynig them although if users buy books and other content they will also make money from that. Also note that the Kindle Fire was created by the same team who makes the PlayBook which also would cut down some costs as the hardware was already designed.

“They are delivering a mechanism for content; putting devices in as many hands as possible to start downloading music, books and videos,” Brown says.

A factor that will boost sales of the Amazon Kindle Fire is the sheer size of Amazon. They’ll put this on the front page when it’s released and push it a number of ways to its large customer base.

We expect sales to do well for Amazon and with the new numbers calculated (details below), it shows that they are still making something on each sale.

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