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Kindle 2 Tear-Down Reveals Price of Components
adeelarshad82 writes "Amazon's wildly popular Kindle 2 got a good old fashioned tear-down from the folks at market research firm iSuppli. According to the organization, the Kindle 2's manufacturing cost is almost half as much as its retail price."
the Kindle 2's manufacturing cost is almost half as much as its retail price
So . . . ?
Is this supposed to be some new business model. I remember working at Monkey Wards and they would raise the prices 400% and then have a 1/2 off sale.
It's the American way.
Beer is proof that God loves us and wants us to be happy.
Is R&D, marketing, distribution, and profit.
Big deal.
Why is this news again??
Is it a surprise to any one that the manufacturing costs are not as much as retail? The article mentions cost to build, ie materials alone, is $185.49. I did not see mention of SW development, so to think that the rest is profit is just silly.
This. Just. In. There's a markup on retail goods! Also, the sky is generally blue and you need oxygen to live.
You are using English. Please learn the difference between loose and lose; they're, there, and their; your and you're.
For a lot of retail electronics, 10% of retail price is about the price of the raw parts. One half of the retail prices seems like pretty thin margins.
I was assuming that the kindle is much like a polaroid camera, or inkjet printer where the cost of the hardware is subsidized or sold at effectively no profit, and all the money is made in the consumables (the books).
Sheldon
It's not like Amazon somehow magically doesn't have any overhead, shipping or design costs for the Kindle. They also have inventory costs, returned item costs and all the other gunk associated with manufacturing and selling an item.
Having merely a 50% of the cost (not including IP) for a still pioneering device like this seems totally reasonable.
Lets not also forget that Amazon pays not only for the bandwidth to deliver all that content, but also pays for the Wireless data service for EVERY unit out there, perpetually.
they are selling it at a loss. A device like this is usually sold as a loss leader as they intend to make up the lost revenue in the sale of the consumables(in this case the ebooks).
"The stupid neither forgive nor forget; the naive forgive and forget; the wise forgive but do not forget." -Thomas Szasz
"... manufacturing cost is almost half as much as its retail price."
Wow, they're actually selling it pretty cheap then.
"Most people, I think, don't even know what a rootkit is, so why should they care about it?"
Back in the days of the C64 'me and the gang' looked at the cost of duplicating a commercial ROM cartridge copier plug-in board (for our own use - not to re-sell). I could do the the electronics, someone had the PCB making kit etc.. but when we added up all the raw costs, we were disappointed to find out it was cheaper to buy the item off the shelf!
AT&ROFLMAO
This reminds me of a story from a WSJ article from 1974, about the nationalization of plants in Chile, quote in Ayn Rand's Philosophy: Who Needs It:
Among them was Dow Chemical Company, which owned a plastics plant in Chile. Bob G. Caldwell, Dow's director of operations for South America, came with a technical team to inspect the remains of their plant. "'What we found was unbelievable to us,' he recalls, 'The plant was still operable, but in another six months we wouldn't have had a plant at all. They never checked anything.' ....Worse yet, the highly inflammable chemicals handled at the plant were in imminent danger of blowing up. 'Safety went to pot,' Mr. Caldwell says. 'The fire-sprinkler system was disconnected and the valves taken away for some other use outside. Then they were smoking in the most dangerous areas. They told us, "You didn't have any fires while you were here before, so it must not be as dangerous as you said."'"
Seriously, why does this company keep getting its name into headlines? Who gives a shit what they feel a bunch of components might cost? Come on, shills. This is a do-nothing company that pisses its pants for publicity, and places like the Mac rumors sites and Slashdot lap it up and parrot their squawkings.
It requires no more than a grade-school education to understand that the price to design, manufature, market, support and service a product is greater than the sum of the wholesale cost of its physical components.
Enough.
Take this stupid company with their silly name out back, shoot it, and don't mention it again.
myselfmusic
I used to work in a shop that sold music equipment. The cost to the business would be approximately 1/2 to 1/3 of MSRP, so even a 45% off "sale" would still net the shop some decent profit. Funny part was, there were slower moving items (like guitars/keyboards/drums) that had MSRP around 200% of cost, and faster moving items (like strings, sticks, cables) that had MSRP around 250-300% or higher.
That's right, for a fast-moving item that cost us $1.50, MSRP would be $8, we'd advertise for $6. The best part? If I knew a customer and they were kind, they'd get them for more like $3. If the customer was a dick and asked for a discount, he'd get it for $5.50, oblivious that the dude in front of him paid half that.
In the case of the Kindle, Amazon is (presumably) the manufacturer as well as the distributor, so the margins can be different. I couldn't tell you exactly what the cost to actually *make* a guitar might be with respect to the distributor's cost, though we can see they're still in business so they must have another markup somewhere.