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Kindle 2 Tear-Down Reveals Price of Components

Posted by timothy on from the venturing-to-gain dept.

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."

6 of 169 comments (clear)

  1. And you are surprised? by arizwebfoot · · Score: 5, Insightful

    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.
    1. Re:And you are surprised? by maxume · · Score: 5, Insightful

      If you are selling your entire production run of a physical good, cutting the price in half just means that you take in half the revenue.

      --
      Nerd rage is the funniest rage.
    2. Re:And you are surprised? by Anonymous Coward · · Score: 5, Informative

      You do know that Kindle was sold-out for the longest time, since production couldn't keep up with demand?
      They have no need to increase the sales at this point.

      Also: there are very real dangers in lowering price for products; human mind tends to consider more expensive products as better, higher-quality things.
      Conversely, lowering price can dillute the brand.

      So there is very little point for Amazon to reduce the price significantly at this point.

  2. And the other half... by rodrigoandrade · · Score: 5, Insightful

    Is R&D, marketing, distribution, and profit.

    Big deal.

    Why is this news again??

  3. How is this news? by stewbee · · Score: 5, Insightful

    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.

  4. Also, don't forget the wireless service... by brainproxy · · Score: 5, Informative

    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.