$79 Amazon Kindle Costs $84 to Make

iSuppli has been calculating the cost to built an Amazon Kindle. To do this the company takes apart the device and looks at the individual parts and then calculates costs associated to each part. The sale price of the Amazon Kindle is $79 although the price to build it is calculated at $84.25 which means Amazon lose about $5.25 on each sale of the device… or do they?

A look at the numbers reveal that the main costs are the screen and main PCB. One thing to note is that the $79 Kindle is actually subsidized by display ads and screensavers while you are not reading. This will be where the loss is made up. Also, the full price version without ads costs $109 which also is making a profit although the $84.25 cost for parts and building the Kindle doesn’t factor in costs of development etc… Remember as well that eBooks are a lot cheaper to distribute than regular books and don’t have costs associated with printing them. As they often sell for the same price or more than the paper equivalent, Amazon will also make a lot of money. I think it’s safe to assume that a number of Kindle owners will buy books through the Kindle store rather than just using it for reading free PDFs.

Direct Material Cost

Display Module: $30.50
Main PCB: $30.37
Other – Enclosures / Final Assembly: $15.08
Box Contents: $2.06
Misc Interface PCBs: $0.59
Direct Material Cost Total: $78.59

Manufacturing Cost: $5.66

Total Materials & Manufacturing: $84.25

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