A little more on the Amazon Kindle Fire

In this post we don't know anymore specific details on the device (or specific hardware contained therein); however, a recent study/teardown by HCS iSuppli reveals an interesting point to mention.  Looks like the cost to make the Kindle Fire Tablet is $209.63 (and this includes materials and manufacturing costs).  That's a loss of right around $10 dollars.

Wait a minute!  Amazon has set the price point at $199, so they are going to immediately take a loss?!  What kind of business plan is that?  Well, if you're expecting your devices to really take off, it's a genius business plan. The concept here isn't to make a bunch of money on a sale of a single device.  But to sell many of their new devices, and build profits by selling quantity.  Plus, I know some people personally who would buy it for the sole purpose of getting it cheaper than what is was manufactured for.

Not only will they make that $10 dollars or so back in the long run.  But they are selling digital goods for the devices.  Access to streaming media (if you go with Amazon Prime), apps, ebooks, etc.  And that extra $10 dollars lost in manufacturing will be more than recovered.

So it's a smart idea for Amazon.  By pricing the tablet at $199 they already have a jump on competition at being a modestly priced, reasonable tablet offering.  It will be interesting to see how it fares.