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LOS
ANGELES - Amazon.com Inc. is taking a loss on each $199
Kindle Fire it sells, according to a new report from the
research firm IHS iSuppli that pegs the total cost to
make each tablet at $201.70.
The
Seattle-based retailer, which is making its tablet debut
with the Fire, has been projected to sell between 3
million and 5 million before the year is done.
The
Fire’s 7-inch screen is the priciest part of the
device, coming in at a cost of about $87 per unit, IHS
said. Supplying the displays for the Fire are LG, which
also makes the Barnes&Noble Nook Color and Nook
Tablet’s 7-inch screens, and E Ink, which produces the
Kindle e-reader displays, the research firm said.
Texas
Instruments is a major hardware partner of Amazon’s as
well, making the Fire’s 1-gigahertz processor, IHS
said.
“The TI
OMAP4430 processor costs $14.65, accounting for 7.9
percent of the Kindle Fire’s total,” IHS said in its
report. “However, TI also supplies other devices,
including the power management device and the audio
codec. This gives TI a total of $24 per each Kindle, or
12.9 percent” of the Fire’s build costs.
IHS also
noted that it has spotted the OMAP4430 processor in its
tear-downs of the Research In Motion’s PlayBook tablet
and the Motorola Droid Bionic and LG Optimus 3D P920
smartphones.
Amazon
also saved money by not including items such as a
camera, microphone, microSD card slot, HDMI port, 3G or
4G wireless radios and other features found in many
rival tablets.
At
$201.70, the Fire is cheaper to produce than the current
bestselling tablet on the market, Apple’s iPad 2,
which has a production cost of about $326, according to
an earlier IHS tear-down. But Apple sells its base iPad
2 at a profit-making price of $499.
The
research firm came up with its cost-to-build estimate
based on taking the Fire apart and pricing out each of
the components inside. In Amazon’s favor to help it
recoup some costs, if the IHS estimate is correct, is
the fact that the company will likely sell books, music,
movies, TV shows and apps to Fire owners through their
use of the tablet which is connected to the company’s
online stores.
And of
course, as more devices are made, they often becomes
cheaper to make, and Amazon has already said it will be
building more Fire tablets than it had first planned.
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