The Amazon Kindle Fire tablet from Amazon has a sales price 2 EURO lower than the production costs, being the only tablet that loses money each time it is sold.
According to IHS, the Amazon Kindle Fire costs 147 EUR To buy and has a production cost of 149 EUR. Amazon is hoping to recover the money by selling movies and books through their online store.
The analysis revealed that the most expensive component is the 7 inch screen which costs 64 EUR. To reduce production costs, Amazon tried not to use expensive components. So Amazon equipped the tablet with a small memory and the tablet does not have a microphone or camera, and it targets people that only want to use a tablet to browse the internet or read.
To compare, the iPad 2 tablet from Apple has a price tag of 369 EUR for users and the production cost is 221 EUR.
18 Million Amazon titles Can Recover the Loss
The Boss of Amazon, Jeff Bezos, said ever since the tablet was presented that Amazon is not trying to make a profit from this tablet.
Kindle Fire tablet users have access to a online store that contains more than 18 million titles of movies, tv shows, songs, applications, games, books or magazines.
Amazon Might Also Release a Phone
In other ideas, by the end of next year Amazon might also release a phone. It is rumored that Amazon is working on this phone with Foxconn.
“Considering the huge success of the Kindle and possible success of the Kindle Fire tablet, we think that this is the next logical step for them” Citigroup reps said.
According to estimates the Amazon smartphone might be a middle class phone with a production cost of 125 EUR.
