IHS iSuppli Research reports that the Amazon Kindle Fire, priced at $199, has $191.65 worth of parts and has a full manufacturing cost of $209.63. This means that with each machine, the online retailer actually loses a few bucks. Amazon likely intends to pick up the difference with media sales, and it’s not that bad a business model. Sony has been doing the same thing with the PS3 for years. With first day pre-orders of the Fire estimated to be about $95,000, it certainly seems like it can work here too.
[…] quarter were also up by 4.3 million units. Plus, let’s not forget that the Kindle Fire is a loss-leader, meaning Amazon actually loses a few bucks on each sale, hoping to earn it back on digital content. […]