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Those with even a passing familiarity with tech news sat up and took notice when Amazon announced a $79 Kindle a few weeks ago. While the e-ink devices are certainly cheaper to make than they once were, iSupplyi has done a breakdown analysis of the device and found that Amazon is losing money on each and every Kindle sold. The total bill of materials? $84.25.
According to iSupplyi, the e-ink screen was the most expensive component at $30.50. The curcuit board was next at $30.37. That only leaves a few bucks for other parts, and $5.66 in assembly costs. Amazon likely makes up the loss, and a hefty profit from the ads shown on this version of the Kindle, as well as from book purchases.
The industry also suspects that Amazon is taking a loss on the upcoming Kindle Fire tablet. Amazon has realized that it’s not the devices that make it successful, it’s the services that make the money. Selling these devices for a small loss is the best way to build market share.
Comments are closed on this article
SrKag
November 12, 2011 at 8:43pm
Nothing is sold at a loss in the electronic world, people want us to beleive this, so that you feel your getting the man. These prices they quot are our market prices not the mans price in huge bulk. You can beleive the article all you want but the real cost is minimal at best, "There are profits abound for the man"
VoodooChicken
November 11, 2011 at 2:35pm
Just ONE book sale and it's instant profit for the rest of time.
nmanguy
November 10, 2011 at 9:16pm
Considering the ad-free version of the Kindle is $30 more at $109, it's not surprising that the ad-supported one comes close to the BOM price. Amazon would give them out for $5 if they could get enough advertising on them.
Zoandar
November 10, 2011 at 4:30pm
Does iSupplyi have access to the presumably railroad-car-sized lot pricing Amazon is probably getting from their suppliers on each component?
Rooke
November 10, 2011 at 5:08pm
I agree. There's gotta be a hefty discount when ordering quantity in the millions.
The loses probably aren't nearly as high as stated.
