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Amazon also selling new $79 Kindle at loss

Written by Andre Yoskowitz (Google+) @ 11 Nov 2011 16:23 User comments (4)

Amazon also selling new $79 Kindle at loss Amazon, who is losing at least $10 on every Kindle Fire sold, appears to also be losing money on every $79 Kindle they are selling.
According to a teardown from research firm IHS, the hardware is costing the company $84.25 to make.

The bill of materials is $78.59 but the added $5.66 includes everything else, says the firm.

It is also important to note that the figure only includes costs "incurred until the end of the assembly line," and does not include shipping and R&D.

As with the Kindle Fire, Amazon is expected to quickly make the money back through sales of e-books. The Fire, however, should be a much larger money maker given its access to Amazon shopping, books, music, movies and cloud storage.

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4 user comments

112.11.2011 9:58

While I think there's a niche for the Kindle e-book itself, I think that the Fire will be a go-getter for a lot consumers this holiday season, especially since all of their products are cost-friendly. As for the hit on profits that they will take, take heed: the Amazon business line is perhaps one of the most unselfish ways I have seen. So what if it's at a loss, when they will rake in the profits with app and games with their products, and guess what, it actually works! Imo, this business line makes the most sense because they're not nickel and dimeing you like Apple does with their products, and because they pretty much operate like a retail store (online is a little different since you're not walking in) like Wal-Mart for instance, I predict that the majority of their products will stand the test of time and they'll see a profit in the long run. Apple and Microsoft better pay attention to this one, this is only the beginning for them.


Chance prepares the favored mind. Look up once in a while and you might learn something. - BLUEBOY

212.11.2011 13:32

Still waiting for my Fire and considering putting one of these on order too!


Just my $0.02,

dEwMe

312.11.2011 17:23

Originally posted by blueboy09:
While I think there's a niche for the Kindle e-book itself, I think that the Fire will be a go-getter for a lot consumers this holiday season, especially since all of their products are cost-friendly. As for the hit on profits that they will take, take heed: the Amazon business line is perhaps one of the most unselfish ways I have seen.

I don't know about unselfish, but it's definitely smart business. When people talk about Apple's profit margins, what they usually fail to mention is the considerable value in establishing a big market presence and customer base. In the 1970s, US television manufacturers had much higher profit margins than their Japanese counter parts. The Japanese companies, on the other hand, valued sales over short term profits. It was one of the major factors in that industry dying in the US.

Amazon's choice to stick with their own proprietary ebook format concerns me though. It's not a dealbreaker for me since you can be sure the Kindle Fire will be jailbroken sooner, rather than later, so you should be able to read whatever ebooks you want on it. But for the average consumer that won't be an option.

Personally, though, I would much rather pay the extra $50 to get a Nook Tablet. It has the same processor, twice the memory, twice the internal storage, and a card slot. If you have the extra $50 to spend, it's well worth the difference IMO. Once you can jailbreak it you will also be able to put the Kindle app on it, giving you almost all the benefits of the Kindle Fire on a better tablet.
This message has been edited since its posting. Latest edit was made on 12 Nov 2011 @ 17:26

Rich Fiscus
@Vurbal on Twitter
AfterDawn Staff Writer

414.11.2011 19:53

Originally posted by vurbal:
Originally posted by blueboy09:
While I think there's a niche for the Kindle e-book itself, I think that the Fire will be a go-getter for a lot consumers this holiday season, especially since all of their products are cost-friendly. As for the hit on profits that they will take, take heed: the Amazon business line is perhaps one of the most unselfish ways I have seen.

I don't know about unselfish, but it's definitely smart business. When people talk about Apple's profit margins, what they usually fail to mention is the considerable value in establishing a big market presence and customer base. In the 1970s, US television manufacturers had much higher profit margins than their Japanese counter parts. The Japanese companies, on the other hand, valued sales over short term profits. It was one of the major factors in that industry dying in the US.

Amazon's choice to stick with their own proprietary ebook format concerns me though. It's not a dealbreaker for me since you can be sure the Kindle Fire will be jailbroken sooner, rather than later, so you should be able to read whatever ebooks you want on it. But for the average consumer that won't be an option.

Personally, though, I would much rather pay the extra $50 to get a Nook Tablet. It has the same processor, twice the memory, twice the internal storage, and a card slot. If you have the extra $50 to spend, it's well worth the difference IMO. Once you can jailbreak it you will also be able to put the Kindle app on it, giving you almost all the benefits of the Kindle Fire on a better tablet.
. True, i do agree on what you're mentioning about the downside specs of the Kindle, but consider this: When a parent or even a person gets a tablet for themselves or a kid, (1) It's going to be as cheap as they can possibly get, (2) It has to be easy to use and easy to see/read for the eyes, and (3) can it be upgradeable or even future-proof, since parents don't want to buy a table every year if it's not upgradeable. These factors and some factors I'm sure I'm not thinking of all play into whether or not a tablet is successful or not. If they can get 2 of the 3 factors I mentioned to convince even a person much less a parent to buy a tablet, then they will succeed in the market. It's all in how they use their strategy and Amazon I think has a much larger and broad sprectrum vs. Barnes & Noble. Their tablet will do good, but I don't think it will have penetration in the market for the long run like Amazon does, imo.
This message has been edited since its posting. Latest edit was made on 14 Nov 2011 @ 20:00

Chance prepares the favored mind. Look up once in a while and you might learn something. - BLUEBOY

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