Making It Up In Volume… the Amazon Kindle
There’s an old joke about the vendor in New York that bragged that he sold his wares cheaper than anyone else. “Yeah,” said his competitor, “but you are selling BELOW the actual cost of the item!” “Ha!,” said the vendor, “I make it up in volume!” Get it? Selling below cost, even at volume, nets you no profit! However, that is what Amazon is doing! But they WILL make it up in volume of books sold!
Computerworld – Teardown experts at IHS iSuppli found that it costs $201.70 to build Amazon’s new Kindle Fire — that’s almost $3 more than the device’s $199 retail price.
Many analysts expected Amazon to take a much larger loss on the Kindle Fire, if only to better compete against other tablets such as the iPad 2, which has a starting price of $499, or the Nook Tablet, which starts at $249. Amazon is expected to make up the loss through sales of products and apps to Kindle users.
According to iSuppli’s tally the Kindle Fire’s hardware costs $185.60 and the cost of manufacturing the device is $16.10.
The $201.70 figure is an actual teardown cost estimate that was derived from taking apart one of the Kindle Fire tablets, which were released Monday. That total is $7.83 less than the $209.63 virtual estimate that iSuppli made in September.”