October 7, 2011

Amazon losses $10 from each Kindle Fire Device ?

Amazon's Kindle Fire seems making the trend in touch pad world with the very attractive price of $199. But according to iSuppli, seems Amazon is losing about $10 per tablet.  the estimated build cost of the device is said to be $209.63, where $191.65 would be the cost of materials with $8.40 manufacturing costs and $9.58 margin.

According to the sources, two facts can be highlighted as answers for the big question, why ?

1. Every 1 out of 4 people (27 % to the exact amount) purchase kind of accessories for the device from Amazon, having high margins.But this may be making some backup but  not completely.

2. Amazon is heavily marketing the shopping at own retail shop, where that would create a wider business model. The company is trying to  get the maximum advantage from the industry being the largest retail store as well as a touch pad manufacturer. The significant fact here is that the other retailers like walmart are not related with any type of kindle kind of thing which can be used for promoting retail everyday goods. On the other hand, successful device makers like Apple are targeting on the hardware and content selling of the devices. So seems Amazon is making a unique business model with Kindle Fire.