Web journalism is here to stay - Roy Greenslade, Guardian Online
|
|
|
Amazon makes a $10 loss on each Kindle Fire tablet
ONLINE RETAILER Amazon is losing $10 on every Kindle Fire it sells.
Launched last week, Amazon's Kindle Fire tablet is seen as a major threat to Apple's Ipad due to its low price tag. Amazon has priced the Kindle Fire at $199, significantly lower than Apple's devices, making many wonder just how Amazon can price its tablet so low when other device makers have pitched their products at prices close to what Apple charges for its Ipads.
Analyst outfit IHS Isuppli has estimated that Amazon will be making a $10 loss on each Kindle Fire. The ploy is to use the Kindle Fire as a conduit for selling content, products and services, according to Isuppli, in the same way that Apple uses its IOS devices to push content on Itunes.
According to Isuppli's bill of materials the device costs just over $209 to make with the most expensive item being the touchscreen display costing $87.00. In terms of electronics the memory chips are the most expensive, accounting for $25, followed by the battery and processor costing $18.25 and $15.00, respectively.
It is important to realise that Amazon's bill of materials cost for its Kindle Fire will only go down as production ramps up. Even if the firm initially sells the device at a loss, the exposure that Amazon and its extensive range of products and services will get from the Kindle Fire will more than make up for a few dollars lost on the initial device - the classic Gillette 'give away the razor and sell the blades' marketing model.
Isuppli's figures show that companies can produce a tablet for $200, meaning even if they seek a 50 per cent gross profit margin they can significantly undercut Apple's devices. HP has shown that there is considerable demand for a cut price tablet and, given Amazon's success in the ebook reader market, few will bet against Amazon replicating its success with the Kindle Fire. µ
Tags: Hardware
Share this:
Share
Even with the table being sold at a loss. I think many people will buy it up and make up for it with amazon prime service.
The silk web access sounds interesting too. If they can boost the speed of access without increasing bandwidth consumption then I'm all for it.
The kindle fire really does make me tempted. I'll wait until after it comes out though to find out how long the batteries last with wifi enabled.
WRT to the 'So What Comment' on the price difference between the UK and the US.
You are forgetting that in the UK you have 20% VAT included in that prices.
While in the US sales tax is not listed on prices and is extra and depending on how and or where you buy you need to add between 0% and 14% Sales tax to the US price
When you do that there is not really that much a difference between the UK and US price
Overall Amazon will be in profit from these devices
THERE IS NO WAY AMAZON COULD BE MAKING A LOSS ON A TABLET COMPUTER SELLING FOR $200.
FOR $200 I CAN BUY A NETBOOK WHICH HAS A BETTER CPU, MORE RAM, A HARD DRIVE, A BIGGER SCREEN, IT ACTUALLY HAS A KEYBOARD! AND IT HAS A WINDOWS OPERATING SYSTEM.
DON'T BELIEVE ANY OF THIS CRAP, THE KINDLE FIRE SHOULD BE WORTH, AT THE VERY MOST, ABOUT $50 TO MANUFACTURE. THAT IS TO SAY, IF THEY APPLY THE PROPER SCALE OF MANUFACTURING.
THEN AGAIN AMAZON IS A BOOKSTORE, SO MAYBE THEY DON'T KNOW HOW TO DO THAT.
Amazon are going to reclaim all that loss from the UK if the basic kindle is an example. In the USA it sells for 79 dollars, in the UK they want 89 pounds which is 137 dollars at todays exchange rate. on that basis the Fire will sell for 224 pounds or 145 dollars more than the USA. This make up fro a lot of 10 dollar losses. Welcome to ripped off Britain.
Maybe IHS Isuppli took a back hander from Amazon to print this information to make consumers feel like they are getting a bargain?
Honestly, if someone is going to gauge the success or failure of a product based solely upon the build costs, then most big business around the world should never have dominated their respected markets. This article shows how relying on IHS Isuppli to lend it credence, then contradict the title of the article with fill about selling into markets is pointless. Whilst I realize the article may be about dominating the markets through other means like content dispersal, I feel the method for grabbing "the click" for advertising means is pretty base.
Disappointed.
Honestly, if someone is going to gauge the success or failure of a product based solely upon the build costs, then most big business around the world should never have dominated their respected markets. This article shows how relying on IHS Isuppli to lend it credence, then contradict the title of the article with fill about selling into markets is pointless. Whilst I realize the article may be about dominating the markets through other means like content dispersal, I feel the method for grabbing "the click" for advertising means is pretty base.
Disappointed.
Finally someone is making a smart move with a tablet. HP only did this after their product was DEAD.
Amazon is going to get a lot of Fire tablets out there, being used. Momentum will build. Taking a loss, on hardware only, initially is a strategic move needed to get any significant share of the market.