Amazon Kindle Fire Sold At A Loss?

Amazon’s first Android tablet, the Kindle Fire, may be sold at a loss according to estimates made by “Market Intelligence” expert IHS iSuppli. This tells us that it’s a tablet most other companies simply couldn’t afford to make.

The Amazon Kindle Fire was revealed on 28 September, and set a new standard for sub-£200 tablets. But it sounds like it’ll be a tough act for other manufacturers to follow as it is set to be sold at a loss. According to IHS iSuppli the cost of its components and manufacturing racks up to $209.63, $10 more than the $199 asking price. A number of similar estimates have surfaced online, but at best suggest that the profit margins for the 7in tablet will be desperately slim.

Kindle Fire
It points towards a similar strategy implemented for the Kindle ereader – the Kindle Fire will ignite activity on Amazon-branded services like the Kindle bookstore, Amazon MP3 and so on, netting its maker some dollars in a less direct manner. It’s good news for us potential buyers though, proving that the Kindle Fire is categorically great value for money in pure hardware terms.

With an IPS screen, the same tech used in the iPad 2, and dual-core 1GHz processor, the Kindle Fire outclasses every sub-£200 tablet we’ve had in to review so far. Such aggressive pricing tactics are not good news for rival Android tablet makers though, which generally have to rely on making money from hardware sales rather than profits resulting from embedded services. Some have suggested that Samsung’s Galaxy Tab 7.0 Plus will retail for $199 in the US, but with a similar spec to the Kindle Fire on-board, it makes us wonder how Samsung could possibly make any money from such a device.

IHS iSuppli’s figures break down into $191.65 for components and materials, leaving $17.98 for additional manufacturing costs. As yet, no UK release details have been revealed but the Kindle Fire will start shipping in the US on 15 November. We’ll be back with more details as they surface.

via Reuters