Amazon tablet costs $209.63 to make, IHS estimates

http://finance.yahoo.com/news/Amazon-tablet-costs-20963-to-rb-2965697034.html?x=0&sec=topStories&pos=6&asset=&ccode=

by hariis • 15 years ago

29 29 15 years ago

finance.yahoo.com

Counting the value they get on average from each customer, they should make $10 in profit on each device according to iSuppli, but they'll probably make a little more than that.

"When further costs outside of materials and manufacturing are added in -- and the $199 price of the tablet is factored along with the expected sales of digital content per device -- Amazon is likely to generate a marginal profit of $10 on each Kindle Fire sold," the research firm added.

hugacow2• 15 years ago

I bought a $29.99 Kindle Fire Zip Sleeve, which is easily at least $10 in profit to Amazon. Unlike iPad owners, Kindle customers buy covers, so I'm probably not in the minority, even if it is a relatively cheap device.

When ours comes in, I also plan to buy apps, etc. Easily an additional $10 will be spent within days of acquisition. My guess is that they will have at least another $30 in profit the first year from books, etc. and may sign up for Amazon Prime to get unlimited streaming, which is something I hadn't considered seriously until I saw it on the Fire page.

No wonder Amazon stock went up about 20% over the past several months. Some people knew this was going to be a big win.

WalterBright2• 15 years ago

> I bought a $29.99 Kindle Fire Zip Sleeve

I use a used bubble wrap mailing envelope. It fits the Kindle perfectly, protects the Kindle very well, costs $0.00, and it doesn't scream "steal me".

mdasen• 15 years ago

The big question will is: how long will the Kindle Fire last? That is to say, will this initial model still be the model sold in 6, 12, 24 months time? If Amazon can make people think of the Kindle Fire not as a piece of technology that is quickly out of date, but a bit of a premium device (albeit at a cut-rate price) that isn't going to feel old in a year, the economics will get much better over the product's life-cycle. Given that the specs on the device are pretty good (dual-core processor, display with IPS) yet nebulous (I haven't seen a stated resolution, processor clock speed, or RAM amount), it's possible that Amazon wants people to think of this as a product that won't change as quickly as, say, Android devices change. Amazon also has the option to exert a decent amount of control over the platform since they're doing both the hardware and the software and I think the Silk browser is part of that desire to move things that would be spec dependent off the device itself to ensure greater hardware longevity.

If Amazon is still selling this model 1-2 years from now, they'll be in a decent position. If people obsess over specs rather than wanting to buy into an "Amazon experience" or similar, less-spec-driven purchase process, then Amazon might not be in as good a place given the low to negative margins at release.

av500• 15 years ago

CPU is an OMAP4, dual core A9 at 2x1GHz. The CPU is pretty good and can e.g. encode/decode full HD easily. RAM should be 1GB which the new iPhone is rumoured to come out with, so it should be good for 2-3 years...

In total the HW platform is pretty solid, it's not a relabeled cheap Chinese tablet...

majorlazer• 15 years ago

RAM is actually 512MB. Which is rather low by today's standards. But as long as they strip the Android OS to run only what is needed, not like the bloated crap that's coming from the major carriers, it should be enough for most cases.

polshaw2• 15 years ago

I believe these chips can decode full HD in realtime because they have hardware acceleration for this. Remember, not even an intel dual core @ 1ghz could decode full HD in software in realtime.

hugacow2• 15 years ago

Apple made their big money in the past 10 years really because of the combination of content available and style. People still want style, but the style market is already owned by Apple. Apple doesn't own everyone, because not everyone can afford or buy into it. For the past two years, various companies have captured a big part of rest of the market, but data plans, etc. are still prohibitively expensive, so not everyone has either an Android or iOS device. But, here comes Amazon. It has an extremely large part of the market already, and now they are going to pick up all of the people that couldn't drop $500 for an iPad. AND they say if you get Prime, you have unlimited streaming movies. It is a no-brainer.

baddox• 15 years ago

The screen resolution, according to Amazon's own product page, is a (standard but unimpressive) 1024 x 600.

sliverstorm• 15 years ago

I haven't seen a stated resolution, processor clock speed, or RAM amount

Amazon has already set a precedent of operating like this, so I am not surprised. I am a techie with a head for specs. I've owned my Kindle 2 ever since the day it was released, and I haven't the foggiest idea what CPU it has, how much RAM it's got, or even how much flash it has or what version of the Linux kernel it uses. It's just a Kindle 2.

They don't hide the specs, but they (rather honestly) only talk about the specs that actually matter, and leave the other stuff in the wings. I figure it's part of their strategy of marketing to ordinary folk- not too different from Nintendo's marketing of the Wii, as compared to the Xbox 360 and Playstation 3.

To give you an idea of specs that "actually matter"- while I know nothing about the internal specs of a Kindle, I know (thanks to Amazon marketing) that the Kindle 3 has a 50% better contrast ratio than the Kindle 2, page turns were some 20% faster, and battery life was improved. Upon seeing one, I saw it was noticably smaller too. I think you'll agree that in a Kindle, these specs are far more relevant and honest than clock speed or resolution.

Dylan16807• 15 years ago

Still, screen resolution is one of the most important details. Up there with battery life.

brudgers• 15 years ago

>"The big question will is: how long will the Kindle Fire last?"

I'm not convinced that question has much relevance regarding the Fire because it has little relevance in regards to Amazon. If the Fire2 comes out next February, Amazon will still see it as just another device upon which they can sell content and their customers will see it as little more than the latest "super Kindle."

Unlike HP, Amazon can make money with content and has the experience to do so (One might even argue that they are in a far better position to make money with content than even Apple given Amazon's relationships with content providers and the extent of Amazon's cloud infrastructure). Of course, one might argue otherwise as well.

However, Amazon has a history of investing for the long haul and a more powerful consumer oriented tablet is certainly consistent with that history.

BlazingFrog• 15 years ago

Don't know where they got the specs or even if they are accurate: http://osxdaily.com/2011/09/28/compare-ipad-2-kindle-fire/?u...

WalterBright2• 15 years ago

>I haven't seen a stated resolution

Right from Amazon's page on the Kindle Fire:

7" multi-touch display with IPS (in-plane switching) technology and anti-reflective treatment, 1024 x 600 pixel resolution at 169 ppi, 16 million colors.

Not hard to find.

wazoox2• 15 years ago

iSuppli routinely made the same claim about iPhone 3, 3GS and 4, as well as the iPad 1 and 2. They take the standard, off-the-shelf component prices, make an addition and publish a press release "Ta-da! They must be losing money, those sneaky bastards!". This is getting tiring.

Amazon, just like Apple, doesn't really buy components by the million at street unit price, is this a surprise? Why do people still comment on these non-events, insignificant press releases? This is only iSuppli marketing, and not much else.

InclinedPlane• 15 years ago

Amazon is very sensitive to costs, and they are also very, very good at negotiating costs. If you knew how much UPS charges them for some of their services you would be shocked, for example. Given that the naive component cost for the Fire comes out very near to the retail price I'm pretty sure that they are actually making a profit on the devices.

kalleboo• 15 years ago

> They take the standard, off-the-shelf component prices

Do you have a source for this or are you just making an assumption?

wazoox2• 15 years ago

At least that was exactly the case the first few times they made their PR on iPhones; they gave the price per component, and it could easily be verified on the web to be usual, off-the-shelf street prices.

DenisM• 15 years ago

The bigger picture is that Amazon is my library - they keep all my books. Now they want to keep all my movies, music and apps. If they succeed, they will keep me as a customer for life, and that's way more than $10.

Similarly, Apple wants to be my library too - they keep some of my music, most of my apps, and now they also want to keep my videos, my app data (including but not limited to books) and the rest of my music via iCloud.

IOW, they key battle here is for being X in "I keep all my books/music/movies/games over at X" for the average Joe.

JamieEi• 15 years ago

The difference is that your Amazon content can be used on virtually any device, whereas Apple has little interest in bringing iX to any additional non-Apple devices.

fragsworth• 15 years ago

It's somewhat fascinating to see how Apple, Amazon, Google, etc. are taking over traditional publishing businesses with their platforms.

Why were traditional publishers blind to the fact that technology would replace them if they did not act? Or, if they were not blind of this fact, what prevented them from producing or investing in the new technologies themselves? What is it that makes old companies so slow to react to shifts in technology?

There is some kind of inherent advantage that tech companies seem to possess: regardless of their original market, they tend to be capable of adapting to significant market changes, sometimes with the effect of consuming old markets.

Hyena• 15 years ago

Google, et al are taking over the traditional printing and retailing business. This was only the province of publishers when it made financial sense to provide these services in house. Publishers also market, set, edit, translate, and finance books. In the ebook market, this can mean both simplified distribution and production; it is not a problem for publishers.

AlexMuir• 15 years ago

Sold at a $10 loss, which Amazon will recoup off about three eBooks over the lifetime of a device. My immediate thought was 'Why isn't everyone (being doing this?', and then I read of fears of a pricing war at the lower end of the tablet market. But that's not going to happen, and here's why.

Samsung and HP aren't retailers. People don't (almost without exception) buy direct from them. You don't visit Samsung.com and order a Tab. You buy them at other retailers like BestBuy and (lol) Amazon. So Samsung have to add another hefty cost on top of their manufacturing cost - the retailer's margin. Bestbuy don't want to be stocking shelves full of Galaxy Tabs, littered with merchandising, for the lure of 3%. They probably didn't much fancy the HP Touchpad either, and look how that turned out. (They'll stock Apple goodies for wafer-thin margins though, because it brings in affluent customers and looks good in the store.)

Amazon are going to be playing on their own at the $200 price-point - not only are they the only player who can subsidise devices with future content sales, but they can distribute them for virtually nothing. $1 to UPS and your Kindle is on its way.

But there's a big multicoloured elephant in the room waving it's trunk around. Yes, it's Google. And they've got neither manufacturing, nor retailing, nor future content sales. But they're big and rich and a bit mental.

Also posted at http://www.alexmuir.com/2011/09/why-apple-and-amazon-are-con...

polshaw2• 15 years ago

You say samsung lose margin to retailers. Well amazon lose margin to manufacturers the same way. Prices haven't been reasonable yet because Apple showed people will pay a hefty premium; android tablet makers neither wanted to shrink this pie nor to appear inferior ('cheap'). Amazon is selling the fire as an upsell on an ebook reader, so they can't afford this luxury; $200 is already expensive for what is primarily positioned as a book replacement device.

As for google, they have motorolla. And their 'content sales' is web use ( > advertising). But do they need a cheap tablet? No, Amazon is making it for them already, for a $10 loss.

DrStalker• 15 years ago

Vendors like Samsung and HP also have much lower expectations of additional future purchases from them once a user buys the device.

If you buy an eBook reader you need to obtain a steady stream on content for it as long as you want to keep using it, while other retailers have a far higher chance of not getting that $10 back because they don't have a well establish content store like Amazon or iTunes.

Amazon tablet costs $209.63 to make, IHS estimates

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