Amazon’s offering its New Kindle Fire less than for what it Costs Them to Make [STUDY]

Amazon recently announces its new tablet Kindle Fire for $199, which company supposed to compete with Apple’s iPad. However, a recent study reveals some interesting fact about this new tablet from Amazon. According to study, the Kindle Fire costs company $209.63 to make, which means that the company bears a loss of $10 for each unit of Fire it sells.

A quick review of the device’s components is provided by a research firm IHS on their website. According to IHS calculations, the material used in Amazon tablet costs $191.65, while adding the factory expenses will make the cost of production to reach $209.63 compared to its preset retail price of $199. However, according to IHS, Amazon will still be expected to make a slight profit of $10 on each unit of Kindle Fire sold, particularly, if we considered the sales of digital content along with the tablet.

Contrary to IHS estimates, many researchers believe that Amazon will not be able to generate healthy revenue from the sales of Kindle Fire or its digital content including eBook, music etc. Rather researchers are of the view that the Amazon target is to draw more and more customers to purchase higher-margin from its official site. One of the statements made from IHS explains, “So far, no retailer has managed to create an umbilical link between digital content and a more conventional retail environment. With Kindle, Amazon has created the most convincing attempt at this yet, and it is doing so by using established retail tactics: deploying content to get shoppers in the door, and then selling them all sorts of other goods.”

Amazon revealed its Kindle Fire last week and offering it at a price lower than what was expected. The Barnes & Noble’s Nook Color, the closest contender of the Kindle Fire is still has a higher retail price with a difference of $50.

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