Amazon Kindle Fire: $199 to buy, $202 to make
Subsidised tablet's parts priced
Amazon's Kindle Fire e-book reader tablet costs more to manufacture than the online retailer is charging punters for it.
According to a take-apart conducted by market watcher iSuppli, the bits inside the Fire total $201.70. That comprises $185.60 for the parts, $16.10 for Amazon's contract manufacturer to put them all together.
Shipping the unit to buyers, the cost of coding Android to fit the hardware and to create the Fire's unique UI and marketing can only take the cost price of the Amazon tablet even higher above the $199 charges consumers for the device.
What Amazan can and does do is cover that difference out of the profit it will make selling content to Fire owners.
Breaking down the $185.60 parts cost, we see that the display and touchscreen assembly comes to $87, while the main PCB costs $64.45 - $22.10 for the memory, $14.65 for the Texas Instruments CPU, $4.50 for the Wi-Fi module and $23.20 for all the other chips, capacitors, diodes and such.
The battery costs $16.50, iSuppli estimates, with the plastic casing adding $14.40 to the total and the packaging a further $3.25.
There's no an awful lot more to the Fire's hardware than display, motherboard, battery and case, as iFixit's own teardown shows.
This reveals the presence of 8GB of Samsung Flash, 512MB of Hynix DDR 2 memory, a Jorjin Wi-Fi module and assorted power management, audio code and bus transceiver chippery from Texas Instruments. ®
I'm always a bit puzzled about these "it costs so-and-so much to make" sort of teardown reports.
Mainly because I'm curious about where they get their cost figures from. Do they actually know what Amazon (or Apple or whoever) are paying their suppliers for components, etc? Or is it based on what the person producing the report would have to pay if they shopped around their suppliers or local box shifters or whatever? Or is it based on some kind of industry average/minimum data for particular components (or types of components).
The main reason I wonder about this is that, unless the cost data is coming from the first source (i.e. the people who actually really know what they're paying to have these things made) then the entire report is just so much speculation and hot air really. And while I'm sure that it is possible to get the information from the primary source (by fair means or foul), I also know that such financial data and details would normally be regarded as "Commercial - In Confidence" (or similar) by most companies (and their supply-chain partners) and isn't normally disclosed.
I'm more than happy to be enlightened if anyone can tell me where the numbers are coming from and whether there's any point in actually believing a word of these things.
I can tell you on my good AC authority too that the Kindle Fire costs even more than $202 to make, and that's before even adding in the necessary patent licensing costs. Plus all the other costs mentioned in the article.
So, dear reader, feel free to pick your AC.
I find it very odd that no one has mentioned (or even remembered) how Apple views iTunes and the App Store.
If you read all the industry reports and earning calls, Apple sells hardware. The App Store and iTunes merely reinforce the ecosystem (hate using that term) that drive a future sale. They've even said that the ecosystem is pocket change to the wider business of selling kit.
But then we have Amazon, who are making a loss leading Fire who will be driving their full ecosystem (shoot me) to make up the sales to cover the loss they are making on the hardware.
If Apple are failing to make serious amounts from the ecosystem (bleh), then why should Amazon succeed?
And why should Amazon succeed on a product that is a cheap and nasty like the Fire, when they have the perfectly acceptable Kindles which have been good sellers in the past, that do have a large following (remember the hullaballo about iPad screens and reading in the daylight??), and the fact Kindles (non Fire) probably do make money?