Report: Amazon gets $10 in profit for each Kindle Fire sold

When Amazon first announced plans to release its Kindle Fire tablet earlier this week, it also revealed that the price of the tablet would be $199. That caused one financial analyst to state in a note that Amazon would be losing $50 for each Kindle Fire sold. Now a new report from iSuppli.com claims the opposite, saying that after checking out the components used to make the Kindle Fire, Amazon could actually generate a small profit from each sale of the tablet.

The report claims that it has estimated the price of the parts needed to make the Kindle Fire and concluded that the parts budget would be approximately $191.65. The actual manufacturing of the Kindle Fire raises that price up to $209.63. Even though this is nearly $10 over the price that Amazon is selling the Kindle Fire for, iSuppli.com claims that it is also adding the fact that users of the tablet will also be purchasing digital content for the tablet. Thus, the report claims that Amazon will actually generate a small $10 profit from the sale of each Kindle Fire.

ISuppli.com also says that the real sales benefit of the Kindle Fire won't be from sales of the tablet or from sales of digital content made for the device. Rather, it claims that the product "will serve to promote sales of the kinds of physical goods that comprise the majority of Amazon's business." It adds, "If doing this means that Amazon must take a loss on the sales of digital content and tablet hardware, it will be well worth it in the end."

Report a problem with article
Previous Story

Microsoft reports more people using IE9

Next Story

Full Uncharted 3 multiplayer mode available via Subway

27 Comments

Commenting is disabled on this article.

It's like those cheap airline trips, certain countries will subsidise the trips to get

bums-on-seats in their cafe's, pubs, museums,dance halls, shops, public transport etc...

Same with cheaper cars, government subsidise car makers so they get duty and v.a.t.

So the device will make profit for content, good move.

So the lifetime profit on a Kindle Fire is $10? What's the point then? If I were an investor - I'd dump Amazon stock!

Anyways - Amazon is counting on millions of new "Prime" memberships but that aint gonna happen.

Dusco25 said,
So you people are ****ed that a company is making money from a product? How insane is that idea...

Really? I have yet to see someone mad here because of this.

And yes, the word ****ed also surprised me. Maybe because English isn't my native language, so it isn't as profound to me. It doesn't have a lot of meaning here actually.

I remember this friend of mine who went in an English college. She's the kind of girl to overreact about anything, and she once was extremely surprised about something, so she said : oh my God ****ing s**t ****ing s**t ****ing ****!!And the whooooole classroom stared at her. But every time she says that, it's between us and it's actually a pretty classic case.

The component prices in this article are estimates. I see no indication of how accurate they are. I also don't see any point to this story.

The only way it will ever become popular is if it gets rooted to support the Android Marketplace. The Amazon store doesn't have anywhere near the same number of apps. And half of the apps on Amazon don't even work half the time.

This is where the iPad shines, is the quality of apps, and amount of them. There are a ton more apps made for the iPad, and very few Android apps designed for a tablet, most of them are designed for a phone and it just doesn't look good on a tablet.

"Even though this is nearly $10 over the price that Amazon is selling the Kindle Fire for, iSuppli.com claims that it is also adding the fact that users of the tablet will also be purchasing digital content for the tablet."
......................................

What kind of stupid logic is this for estimated cost? They can't estimate a product cost off of what sales it gets after. Thats just stupid. Obviously they have some kind of bias reporting going on.

Arr Yor said,
Its going to be a big blow if the fire gets rooted.
I'm not so sure. Sure, maybe the majority of Neowin readers who own a Fire will root it, but you can bet that the overwhelming majority of people (general consumer) who buy the Fire will be using it exactly as Amazon intends. They know this.

And, what about software, service, customer support, shipping, advertising costs? Its just false information for me. I produce my electronic product for $5 each, but with additional costs, one unit costs me about $12!

Err...


A preliminary virtual estimate conducted by the IHS iSuppli Teardown Analysis Service places Kindle Fire's bill of materials (BOM) cost at $191.65. With the addition of manufacturing expenses, the total cost to produce the Kindle Fire rises to $209.63.

Slashdot just posted an article saying that Amazon lose $10, and Neowin posted an article saying they're coming out $10 ahead.

Well...

The actual manufacturing of the Kindle Fire raises that price up to $209.63. Even though this is nearly $10 over the price that Amazon is selling the Kindle Fire for, iSuppli.com claims that it is also adding the fact that users of the tablet will also be purchasing digital content for the tablet. Thus, the report claims that Amazon will actually generate a small $10 profit from the sale of each Kindle Fire.

Doesn't make the article less strange though, the fire is sold at a loss.
And while as expected they make it up in sales of other things that's also odd as I get a feeling the profit made on stuff sold from them could come out higher than $10, wonder where they got that number...

Pc_Madness said,
Err...
Slashdot just posted an article saying that Amazon lose $10, and Neowin posted an article saying they're coming out $10 ahead.

Read the article. That's about all I have to say about that.

Pc_Madness said,

Slashdot just posted an article saying that Amazon lose $10, and Neowin posted an article saying they're coming out $10 ahead.

Yet another article to prove my point : Neowin is often incoherent with the rest of the web.
It's like the Fox Channels of unprofessional journalism.

They could have added an interesting point though : parts value alone does not make a price. They actually lose much more than this.

Amazon cares less if they make any profit on the device itself. Their focus is on the profit made on the music/video/book service it provides.

Components get cheaper over time, this is what Microsoft did with the 360, sell it at a cheaper price than it's competition and gain the rewards in time.

McKay said,
So much for the rumor they were losing $50 for each one.
This report also qualifies as unconfirmed.

FMH said,
This report also qualifies as unconfirmed.

More interesting still: this one is arguing for "they lose $10 per device" but maybe if people buy books they'll make a tiny profit.

They go on to say the real value is in people looking at advertisements for lamps and televisions on their Kindle which they'll order from Amazon. Seems like a bit of a stretch.

evn. said,

More interesting still: this one is arguing for "they lose $10 per device" but maybe if people buy books they'll make a tiny profit.

They go on to say the real value is in people looking at advertisements for lamps and televisions on their Kindle which they'll order from Amazon. Seems like a bit of a stretch.

Perhaps they are hoping that the price of components will come down drastically.

McKay said,

Perhaps they are hoping that the price of components will come down drastically.

what are you guys talking about.. they make a **** load of cash on movies, games and books.. for every book they sell they make a pretty good sizable profit and since the tablet is locked to their store, they have no competition at all.. Its comparable to how Microsoft does the XBOX 360..