we
read about how the 16GB Wi-Fi only Apple iPad Mini costs a $188 to make
but Apple sells it for $329 thereby making a cool profit of $141 per
tablet. On the other side of the spectrum, Apple’s rival (not Google!)
Amazon actually incurs a loss for every 16 GB Kindle Fire HD tablet
sold. According to a teardown by research group IHS, the total hardware
cost comes to $174 which includes the bill of materials cost ($165) as
well as manufacturing cost ($9). When you add the cost for the stuff
like software, licensing or royalties, the device cost climbs up to
$207.
This
hardware manufacturing cost of $174 is considerably lesser than the
$201 in bills of materials cost that was incurred on the original Kindle
Fire. With the Kindle Fire HD,
the 7-inch display (resolution: 1280x800) itself costs around $64,
which according to IHS is $23 lesser than the 7-inch display on the
original Kindle Fire (resolution: 1024x600). The 7.9-inch display on the
iPad Mini on the other hand costs $80 (resolution: 1024x600). Memory
subsytem including DRAM, 16 GB of NAND Flash costs around $23, which is
$1 more than the 8 GB Kindle Fire.
Amazon Kindle Fire HD exploded view
It is not surprising that Amazon is
actually willing to take a loss on the Kindle Fire HD. “Amazon’s
strategy with the Kindle Fire HD 7-inch tablet is not really to make
money on the hardware itself,” said Andrew Rassweiler, senior principal
analyst, teardown services, for IHS. “Rather, the idea is to create a
product at a compelling price point and then get a lot of consumer
traction in order to put Amazon content and the Amazon online store into
consumers’ hands.”
Read more about the breakdown here.
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