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Loss leader alert: $79 Amazon Kindle costs $84 to build

Not only the Kindle’s specs and features attract people, but also, Amazon’s price tag kindles them to buy. Amazon’s Kindle has priced $79 which actually cost $84.25 for its manufacture, but another sign that Amazon cares more about profiting on the content it sells rather than hardware.

Jeff Bezos, Amazon’s CEO has challenged the bet to get low-cost hardware for consumers, will pay off immensely when they buy more digital content to make up for hardware losses. To the contrary, Apple makes its money on hardware sales and not as nearly as much on content. A market researach made by the company IHS iSuppli , conveys that the Kindle that is tagged with the price $79, actually costs estimated $84.25. This loss is not so severe as the $10 hit Amazon will take for every Kindle Fire it sells. The new basic Kindle still features an E-Ink screen and booted out keyboard from the previous generation. Thereby it has been reduced 30 percent lighter than the previous generation’s. The $79 model provides some advertising, known as “Special Offers” by Amazon. If the user’s choice is a non-ad-filled basic Kindle, it will consume the user of $109. But it does not make it nearly as good of a deal.

The $79 Kindle’s biggest non-Amazon competition will be the $99 Barnes & Noble Nook Simple Touch. B&N recently announced that it would add improved software and a better E-Ink screen that supposedly displays text 25 percent faster than the previous Nook Simple model.

The complete breakdown for materials on the Kindle can be viewed below:

$79 Kindle Materials

Display Module                                            : $30.50
Main PCB                                                         : $30.37
Other – Enclosures / Final Assembly : $15.08
Box Contents                                                 : $2.06
Misc Interface PCBs                                    : $0.59
Direct Material Cost Total                        : $78.59
Manufacturing Cost                                     : $5.66

Total Materials & Manufacturing: $84.25

Source: venturebeat


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