Amazon Really Does Lose Money on Every Kindle Fire HD (But Microsoft, Not So Much)
By Brian Barrett
Fresh on the heels of an iPad mini teardown that revealed $188 worth of components, IHS has pegged the Kindle Fire HD bill of materials at $165. That means that only about 20 bucks’ worth of hardware separates devices with $130 price tag differential. Yeesh.
It was no surprise that the Kindle Fire HD was at best a break-even proposition for Bezos & Co., but that $200 price tag looks even more unhinged when you consider all the research and development and marketing costs that aren’t counted in that $165 figure. Consider that there’s a $141 gap between Apple’s iPad mini bill of materials and its sticker price. That distance, for Amazon, is just $34.
Microsoft, meanwhile, rings up a $271 components bill for every $500 32GB Microsoft Surface it pumps out. That gap makes sense especially given Microsoft’s lack of a wildly profitable content business, which is how Amazon justifies its kamikaze Kindle pricing. Microsoft’s advantage is even more pronounced when you factor in its Touch Cover, which retails for $120 when bought separately, and contains about $16 worth of parts. [AllThingsD]