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Amazon’s Kindle Fire could easily be considered one of the worst kept secrets in the tech industry. Almost every detail was known about the device prior to the announcement in New York last week except one, the price. Analysts were expecting it to land somewhere in the $200-$300 range, but were almost universally stunned when CEO Jeff Bazos announced they would be coming in at the low end of that estimate. At just $199 how much money is Amazon making per device? Well, according to iSuppli, they are actually losing about $10 per tablet.
The $10 loss per unit is based on an estimated build cost of $209.63, however that number alone doesn’t tell the whole picture. The Kindle Fire represents a bit of a Trojan horse to households who already routinely buy goods and content from Amazon. Content purchased is locked into the Amazon ecosystem, and even the Fire itself comes bundled with Prime, a service designed around the notion of free shipping for physical goods.
If a Kindle Fire owner spends even slightly more on Amazon.com over the course of the year on physical items as a result of buying the Fire, Amazon wins big time.
Comments are closed on this article
MrSelatcia
October 03, 2011 at 11:45am
"...and even the Fire itself comes bundled with Prime, a service designed around the notion of free shipping for physical goods."
This was expected, but not announced. The Fire comes with a free 30 day trial, just like everything else on Amazon.
That being said, kudos to Amazon for having the cajones to lose money on the hardware right out of the gate. I'll be picking one up... sometime after the initial launch.
dmonkyking
October 03, 2011 at 5:37am
I preordered two of these, one for me and one for my fiancée'. As a tablet is a toy, the price point Amazon has set finally makes a compelling case to buy one. I think a lot of manufacturers need to realize that they can't set an Apple price for their products, because unlike Apple, they need to actually compel consumers to buy their products, whereas Apple has the media and everywhere else pushing their products as the best in the world and the standard to live by. Honestly, I kind of feel like Apple pushes mediocrity, because no matter how better your product is, people compare other tablets against Apple's price points unfortunately. So I think companies will lose the motivation to make a better device if they have to take a large financial hit, because of it. Amazon is the exception, because they have a large ecosystem to make up for it. It's sad that Amazon has to technically lose money to actually compete, which is what other tablet manufacturers are probably going to have to do if they want to start taking market share away from Apple; or people need to actually research what they buy instead of buying something because it has an apple on the side.
tekknyne
October 03, 2011 at 5:14am
I never thought about getting a tablet, but now that I can get one at Amazon's expense, I have reconsidered. $200 is just too sweet a deal to pass up. Looking at the specs, this thing destroys a $500 Ipad and is much faster than the Nook color.
Sorry Amazon, but you won't funnel me through some crap online portal to buy your merchandise. This thing will get a spiffy custom ROM as soon as possible.
Conal_keaney
October 02, 2011 at 11:52pm
Oh wow HG, excuse me for setting you off.
Please explain to me this line:
"Apple's mobile products work better because they are made of better quality materials."
What better quality materials? If you haven't noticed HG, Apple's iProducts is what sells based on the fact is mostly held by fad. iPod? A fad. I'd never use that monstrosity of the iTunes store with it's horrible DRM. Ipad? Cmon fad as well. Iphone? Have you bothered to look that the Iphone is like old news? I rarely see anyone where I live with an Iphone anymore.
As for Win 8...have you even seen it? Yeah it'll be nice for...tablets.
Mighty BOB!
October 02, 2011 at 4:13pm
Only $10 eh? They certainly will more than make up for that with all the sales customers will buy through the tablets online.
Captain_Steve
October 02, 2011 at 3:02pm
This may be Amazon's only tablet for quite some time then if the video game industry is to be used as the marker for selling hardware at a loss. I'm not sure any tablet has had the hardware to boast wanting to keep it around for five years. But maybe they're getting a fairly decent discount on parts in bulk and they'll be willing to release a new model in less time.
Wingzero_x
October 03, 2011 at 6:57am
Well you have to take in consideration the video game industry is losing a lot more in cost than $10. I applaud Amazon for this.
kixofmyg0t
October 02, 2011 at 12:10pm
Although the "bean counters" and shareholders(who rarely know anything about the company...) won't like this....it's a VERY smart move.
Holly Golightly
October 02, 2011 at 11:50am
You know... Every company should make their products like this. Premium quality at affordable prices. This is why Apple was so good at it. Now the Kindle will be just as good. I do not know why... It looks exactly like the Blackberry Playbook... Yet I still want the PlayBook. Although to be more fair, the Playbook gives you a more fuller experience. Two webcams, front stereo speakers, a fully touch interactive bezel, an open platform, and a premium finish. This is something that the Kindle sort of skimps out on. I do not know about the finish grade, but I know for the others, yeah. I will give it a try, but I am not a fan of any closed platforms.
Wervenyt
October 02, 2011 at 12:34pm
1. As the guy below me said, Apple =/= affordable in any way except iPods.
2. It costs half that of the Playbook - 'course it's going to have fewer bells and whistles.
Holly Golightly
October 02, 2011 at 12:45pm
I meant that the Apple product is made of a better finish. The company used a better finish. Something every company should use. Not use cheap materials. What Apple makes are premium grade products. What Amazon is doing is selling it at affordable prices... Hopefully I am a little more clearer now.
kixofmyg0t
October 02, 2011 at 12:10pm
You serious mentioned Apple in the context of "affordable prices"?
Your entire argument is invaid now.
Holly Golightly
October 02, 2011 at 12:43pm
Not... You are reading it wrong. There is no arguing Apple products are of better quality. They are more expensive to make, than say some cheap plastic whatever. That is what I mean.
Conal_keaney
October 02, 2011 at 1:46pm
Good Quality != Shiny Plastic;
Affordable? With the same amount of money you spend on an Apple product you can honestly either build yourself a better desktop or find a better laptop that offers you more than their "quality" products. Example:
MacBook Pro (17inch Display)
2.2 Intel Quad i7
750GB HDD (5400RPM)
4GB of RAM(unsure if it's DDR3, their website doesn't specify)
Intel HD Graphics 3000, AMD 6750M
All For $2499.00
MSI G Series GT780DXR -099US (17.3inch Display)
2.0 Ghz Intel Quad i7
1.5 HDD (750x2 at 7200RPM)
16GB of DD3 RAM
Nvidia GTX 570M
All for $1899.99 on Newegg.
You never fail to amaze us HG. You always rant about being sheep and whatnot. Ironic you swallowed the Apple Pill.
optionboy16
October 02, 2011 at 9:50pm
I've noticed that too. Holly seems like a very smart electronics girl, but she LOVES to be the devils advocate! I swear, it almost seems intentional vs matter of opinion. Holly, for the love of God, LISTEN to what other awesome MAXPC lovers are saying. We are just trying to point out the facts and HELP you. I like Apple products, but you are full of sh*t. When my PC company opens a store in the mall, and becomes hipsters, I'm done.
Engelsstaub
October 02, 2011 at 2:08pm
You can sell that MSI laptop (which admittedly does have much better specs) in a year or two for far less than half of what you paid for it. Probably like $400 dollars, if one is lucky. You can sell the MBP for most of what you paid for it. There's a lot more to "value" than "power-user specs." Some people will pay more for a better form factor and good battery life/efficiency. My Alienware m15x is as thick as about four of those MBPs. The battery will give you an hour and ten minutes if you're not really doing anything.
There's extremists and irrational fanbois who buy PCs as well as those who buy Macs. Do you really think that MBP is constructed of shiny plastic like the MSI??
illusionslayer
October 03, 2011 at 3:51am
You go ahead and show me a two year old laptop with those phenomenal specks for $400 that's still fully operational, doesn't have a broken screen, and wasn't stolen.
The only reason you can sell anything Apple for more secondhand is because of the Apple Reality Distortion Field. People place some intrinsic value on Apple products and that seems to mean that no matter the age or state of the device it's worth near as much as normal.
Also, spell 'fanboy' correctly.
Engelsstaub
October 03, 2011 at 4:20pm
Such a laptop didn't exist two years ago. Check it two years from now. I have an Alienware (just a bit over a year old) that I paid $2300 for that people are selling on eBay now for 900 bucks. That's with a "big-name" and glowing oohs and ahhs all over it.
You forgot the tired-ass and nonsensical Kool-Aid cliche as well. Reality Distortion Field from the Death Star or whatever; it is what it is. People place great value on Rolls Royces and Volvos as well. They are not the fastest or the most efficient. It doesn't matter how stupid one thinks others are when it's the other who's making his money back in the end.
Also Google the spelling of "fanboi." It's a slang derogatory noun and spelled both ways.
Holly Golightly
October 02, 2011 at 1:58pm
Hey, we were not talking about computers. I am talking about the more popular, the more successful Apple iProdu¢ts. There is no doubt that the iPhone sells better than whatever MSI coughs out. Gorilla glass in the front and back. The iPad sells better than any other tablet in the market today. You got to be a blind idiot to not see this. Apple's mobile products work better because they are made of better quality materials. Now since you want to discuss computer. I am using a Dell Adamo 13 in Pearl. Windows works and can run every program a Ma¢ can plus more. So why wont you drink you little ironic pills and shut the hell up. Windows 8 is the future.
illusionslayer
October 03, 2011 at 3:58am
A.) No one's arguing about Apple being popular except you. I believe this is because it is your only argument as a fan of Apple. However, cocaine is rather popular in some areas. Does that make it a good thing?
B.) MSI doesn't make phones so I certainly hope that the iPhone can sell better than that. Imagine a product that can't sell more than zero products.
C.) Windows can by any stretch of the imagination run every program a 'Mac' can. Hell, it can't even run all the programs OS X can. (Bearing in mind that a Mac is a computer while OS X is an operating system) Similarly, OS X cannot run all the programs Windows can.
D.) Unless there have been incredibly advancements in the field, I am pretty sure one cannot drink solid substances. Which is what would be required to drink your ficticious 'ironic pills'.
