Amazon Won't Take a Loss on Kindle Fire But Will Actually Make $50 Profit Says UBM

[dgstorm]

Previously, several industry reports indicated that Amazon would probably be selling the Kindle Fire Android tablet at a slight loss, and would instead profit from subscriptions, appstore purchases & content delivery. Interestingly, according to the market research and consulting firm UBM TechInsights, that is not actually the case at all, and in fact, Amazon will probably make a profit of close to $50 per device. That amounts to a fairly healthy 25% profit margin. The company calculated this out by extrapolating the basic costs of the Blackberry Playbook with some of its features subtracted to better match the actual Kindle Fire. This actually makes sense, since the new Amazon tablet is basically the same hardware as the Playbook. Here's a quote from the BGR article with some more details, and the chart below breaks it down even further,

According to the firm, the 16GB version of RIM’s PlayBook carries a cost of $170 per unit. Cut $10.50 for the camera system, $1 from the cost of radio components, 50% from the cost of memory since the Fire only includes 8GB of storage, and $2 from the cost of various sensors, and you’re left with a $150 tablet that Amazon is selling for $199. Add to that profit from Amazon Prime subscriptions, Amazon Appstore app sales and money made from Amazon’s numerous other services, and the Kindle Fire is shaping up to be a solid moneymaker for the emerging tablet vendor.

This tablet seems to be shaping up to be a fairly impressive product for Amazon. Share your thoughts.

Source: FireForum.net via BGR

 

[gadgetrants]

Pretty clever analysis, but I think iSuppli's teardown may be more convincing.

Geez, the iPad camera is $6 wholesale??? I have to stop making the argument that all the "extras" push tablet prices up!

And WHY is UBM using the 32GB 3G iPad as the comparison....shouldn't it be a 16GB wifi-only? Weird.

-Matt

 

[nickb34]

And of course, manufacturing costs $0...

 

[gadgetrants]

And of course, manufacturing costs $0...

And development...and PR/advertising...and shipping/storage overhead...

I guess the logic is "we lose money for a while but eventually make up our costs and then it's gravy."

-Matt

 

[Droid-Xer]

With all of amazon's great services (mp3 store, app store, cloud service, book store, movies,etc), they will make a ton of money.