IHS Teardown: Amazon Kindle Fire Costs $202 to Make

| News

An IHS (formerly IHS iSuppli) teardown of Amazon’s new Kindle Fire tablet found that the company cut some corners in order to make as cheap a device as it could. Those corners include using a lower-capacity battery than competing tablets, a small quantity of DRAM, a cheap WLAN-only wireless module, and “minimal box contents.”

Kindle Fire

Kindle Fire

The company estimates the total cost of the Kindle Fire is currently US$201.70, slightly more than Amazon’s $199 price tag. The teardown resulted in a slightly lower cost to the $209 price tag IHS estimated before it had an actual unit to tear down, and it conflicts with another teardown by TechInsight that put the bill of materials (BOM) at only $143 (plus manufacturing costs).

IHS said that in order to make the device as cheaply as possible, “Amazon included a lower-capacity battery than found in the iPad from Apple Inc. or the Playbook from Research In Motion Ltd.; basic 4Gbits of low-power mobile DRAM—while many newer smartphones now feature 8Gbits; and minimal box contents.”

MOre specifically, the battery features a 16-Watt hour capacity, compared to a 20-Watt hour battery on the dead-in-the-water PlayBook, and a 24-Watt hour capacity battery on Apple’s iPad. IHS pointed out that the Kindle Fire can get away with the smaller battery because it doesn’t offer 3G capabilities and has a smaller screen. Rounding out the cost savings is the lack of camera, which was already known, and using a cheap, molded plastic case, rather than a metal case.

 “The primary factor is Amazon’s product specification choices,” Andrew Rassweiler, senior director of teardown services for IHS, said in a statement. 

The company also found that Amazon shaved a few dollars off the cost of the device by using WLAN-only wireless module, rather than a WLAN, Bluetooth, and FM radio combo unit. Apple doesn’t offer an FM radio in its iPad, either, but the feature is available on some Android devices.

Another interesting aspect of IHS’s report is the suggestion that Amazon has been able to get better component supply deals because manufacturers have grown somewhat antsy to find someone, anyone, who can turn the iPad market into a tablet market.

With media tablets from other companies failing to live up to expectations in recent months, Amazon’s relative clout among component suppliers has risen,” Mr. Rassweiler said. “Suppliers are interested in finding the next ‘rock star’ tablet that will allow them to sell millions of components for a single device. As a result, these suppliers are willing to cut better deals for Amazon.”

At the heart of this low-cost approach to offering a tablet is the ability to sell more products and services through the Kindle Fire. With each device losing money at the point of sale, especially for devices sold through third party retailers, Amazon is hoping to make up those losses by selling more digital content and physical goods to users of its tablets.

If the company finds that its Kindle Fire customers will buy a significant quantity of such products and services that they wouldn’t have otherwise bought, the device could be a significant money maker for the company.

Sign Up for the Newsletter

Join the TMO Express Daily Newsletter to get the latest Mac headlines in your e-mail every weekday.

Comments

Lee Dronick

Well as you say they may sell it at a loss in order to make money selling you razor blades for it. It is going to be an interesting year.

sflocal

If anyone has a chance besides Apple, it might be Amazon.  However, when most users realize that this is not the “same as an iPad with a lower price”, I think most will end up in the landfill.

What a shame that so many companies combined have made millions of tablets that are essentially junk in the hopes consumers would simply impulse-buy, or make price their primary focus, purchase now and hope to make the next cheap junk to sell again later, rinse and repeat.

mhikl

Well as you say they may sell it at a loss in order to make money selling you razor blades for it.

Good point, but I think their razor is more like a set of tweezers and would be a painful way to trim one’s moustache, though picking lint, it would work fine.

archimedes

“Same as an iPad at half the price may” may be a lie, but “lousy device at half the price” seems to work pretty well in the PC market!

Apple’s answer to people with only $200 to spend is “buy an iPod touch,” which is of course a superior device to the Kindle Fire in nearly every aspect except one: screen size.

So far it appears that Amazon is the only company that has an ecosystem that can compete with Apple’s: Kindle bookstore, music store, video store, app store, Netflix-like streaming, “whole widget” that comes preconfigured and (mostly) works out of the box, etc.. Not to mention integration with Amazon’s physical goods store and the temptation of Amazon Prime which bizarrely yet appealingly combines video streaming with free shipping for physical goods.

The iPad may be the post-PC computer, but the Kindle Fire, if it actually works, sounds like the “media tablet” we’ve been hearing about. Even if it fails, Amazon can still keep selling Kindle books/music/video/etc. to iPad users and everyone else.

Log-in to comment