Amazon to lose around $10 for each Kindle Fire tablet sold.
Amazon’s Kindle Fire is getting a lot of attention because of the price, only $199 without a contract and you’ll get a customized Android-powered tablet powered by dual-core TI OMAP4 processor. The price of the device is quite impressive, and it is quite obvious that Amazon will not profit from the sales of the device, but on the online stores pre-installed.
According to iSuppli, Amazon will lose at least $10 for each Kindle Fire sold. The site claims the Kindle Fire costs $209.63 to build, adding the analysts’ prediction that Amazon will profit from digital content like e-books, mp3 songs and Android apps.
Amazon's Kindle Fire Android Tablet
Teardown site iSuppli explains that Amazon doesn’t make a substantial profit on sales of the Kindle Fire will generate profits “on sales of shoes, diapers, and every other kind of physical product imaginable.”
Other Android tablet manufacturers don’t have the “capability” to copy Amazon’s tablet business strategy because they lack online retail stores, like Samsung for example, the Galaxy Tab 10.1 is very expensive sporting the same price tag used by the iPad 2. The Samsung Galaxy Tab 10.1 is using Android Honeycomb operating system bundled with Google’s official Android Market.
Kindle Fire and its cheap price tag is already giving other tablets the “pressure.” In fact, both the HTC’s 7-inch Flyer Android Gingerbread tablet and RIM’s BlackBerry PlayBook tablet have received a massive price drop of $200 via Best Buy.
Amazon is trying to compete against Apple with the Kindle Fire. Apple’s App Store, iBooks and iTunes have generated massive sales due to success of the company’s hardware products like the iPad, iPhone and the iPod Touch. Apple’s digital stores pre-installed in the iOS operating system all require credit card or debit card to make purchases or just to update applications.
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