With the release of the Kindle Fire, Amazon continues its policy on selling its hardware underpriced since a recent IHS iSuppli teardown has revealed that the tablet's bill of materials, together with manufacturing services expenses, comes in at $201.70 (149.6 EUR).
Amazon sells the Kindle Fire for $199.99 (148.3 EUR), so in fact it loses a small amount of money with every tablet being sold.
The reason behind Amazon's aggressive pricing policy of the Kindle Fire is the company's desire to increase its user base, which brings money to the outfit via the paid content they purchase for the device.
“The
Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point,” said Andrew Rassweiler, senior director, teardown services for
IHS.
“Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle.
“This is a similar business model to wireless companies such as AT&T or Verizon. They sell you a phone that costs them $400 to $600 or more to make for a price of only $200.
“However, they expect to more than make up for that loss with a two-year service contract,” concluded the IHS rep.
Amazon unveiled the Kindle Fire on September 28 and the
tablet is based on a customized version of Android, that comes with an unique interface to detach itself form all the other tablets out there running this OS.
Hardware wise, the Fire has a 7-inch IPS screen with a 1024x600 resolution, Gorilla Glass coating, a dual-core TI OMAP4430 processor, and all of these are fitted inside a chassis that weighs 14.6 ounces (roughly 413 grams).
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