Here's How Much Amazon (AMZN) Loses, and TI (TXN) Makes, on Each Kindle Fire...
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Amazon (Nasdaq: AMZN) might just be losing money on its Kindle Fire after all.
According to a tear down by IHS (NYSE: IHS) iSuppli, Amazon's Fire carries a bill-of-materials at $201.70, which includes manufacturing costs. That's about $2.70 more than Amazon's retail price of $199 flat on the device.
The most expensive items on the device -- as might be guessed following similar tear-downs of Apple's (Nasdaq: AAPL) iPad, and other tablets -- is that display and touchscreen, with a cost of $87. That's $2.47 per square inch of viewing.
Fire's main PCB combo, which includes memory, WLAN, and other peripherals PCBs, is $64.45.
Manufacturing added $7.10 per unit, and EMS margin was $9.00.
Numbers are lower than iSuppli's initial estimate of $191.65 for Fire's BOM, and $209.63 when including manufacturing costs and other estimates.
Commenting, iSuppli's Senior Tear-down Director (awesome job title!) said, "The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point. Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle. This is a similar business model to wireless companies such as AT&T or Verizon. They sell you a phone that costs them $400 to $600 or more to make for a price of only $200. However, they expect to more than make up for that loss with a two-year service contract."
As previously mentioned, Texas Instruments (NYSE: TXN) is making a substantial contribution to the Fire. TI pulls in about $24 for each Fire sold.
Amazon is up about 0.6 percent early Friday.
According to a tear down by IHS (NYSE: IHS) iSuppli, Amazon's Fire carries a bill-of-materials at $201.70, which includes manufacturing costs. That's about $2.70 more than Amazon's retail price of $199 flat on the device.
The most expensive items on the device -- as might be guessed following similar tear-downs of Apple's (Nasdaq: AAPL) iPad, and other tablets -- is that display and touchscreen, with a cost of $87. That's $2.47 per square inch of viewing.
Fire's main PCB combo, which includes memory, WLAN, and other peripherals PCBs, is $64.45.
Manufacturing added $7.10 per unit, and EMS margin was $9.00.
Numbers are lower than iSuppli's initial estimate of $191.65 for Fire's BOM, and $209.63 when including manufacturing costs and other estimates.
Commenting, iSuppli's Senior Tear-down Director (awesome job title!) said, "The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point. Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle. This is a similar business model to wireless companies such as AT&T or Verizon. They sell you a phone that costs them $400 to $600 or more to make for a price of only $200. However, they expect to more than make up for that loss with a two-year service contract."
As previously mentioned, Texas Instruments (NYSE: TXN) is making a substantial contribution to the Fire. TI pulls in about $24 for each Fire sold.
Amazon is up about 0.6 percent early Friday.
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