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Kindle Fire teardown puts build cost at less than $3 above retail price

Amazon to make up loss with product sales through its $199 tablet

The Kindle Fire tablet from Amazon.com. Teardown experts at IHS iSuppli found it costs Amazon $201.70 to build the new Kindle Fire, less than $3 above the $199 retail price.

Many analysts expected Amazon to take a much larger loss on the device, if only to compete against other tablets such as the iPad 2, which has a starting price of $499 or the Nook Tablet at $249. Amazon is expected to make up the loss with products and apps sold through the device.

The iSuppli tally covers $185.60 for all hardware, while the cost of manufacturing the device totals $16.10.

The $201.70 price is an actual teardown cost estimate that was derived from taking apart one of the Kindle Fire tablets , which were released Monday. That total is $7.83 less than the $209.63 virtual estimate that iSuppli made in September.

In the latest estimate, the display and touchscreen are the biggest costs, as with most tablets, for a rounded total of $87. The memory, processor, wireless LAN radio, and other peripherals cost $64.45, while the battery cost was put at $16.50. The case was $14.40 and the box contents was $3.25.

Andrew Rasseiler, senior director of teardown services at iSuppli, said Amazon is not making money on the hardware but on the paid content and other apps it is selling to consumers.

ISuppli said the processor is a 1GHz Texas Instrument's OMAP 4430 dual core, which costs $14.65, or 7.9% of the total. That processor is also used in the BlackBerry PlayBook tablet and the Motorola Droid Bionic and LG Optimus 3D smartphones .

ISuppli said it assumed the Kindle Fire would have 8GB of DDR2 DRAM memory in its virtual estimate, but that it only ships with 4GB supplied by Elpida. That difference shaved off a "few dollars" from the earlier estimate, the firm said.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed . His e-mail address is [email protected] .

Read more about mobile and wireless in Computerworld's Mobile and Wireless Topic Center.


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