Amazon’s new jaw-droppingly priced $79 Kindle actually costs $84.25 to manufacture, yet another sign that Amazon cares more about profiting on the content it sells rather than hardware.
Amazon CEO Jeff Bezos has made the bet that getting low-cost hardware into hands of consumers will pay off immensely when they buy more digital content to make up for hardware losses. That’s the exact opposite approach of Apple, which makes its money on hardware sales and not as nearly much on content.
The $79 Kindle costs an estimated $84.25 to make, according to market research company IHS iSuppli. This loss isn’t as grievous as the $10 hit Amazon will take for every Kindle Fire it sells.
The new basic Kindle still features an E-Ink screen and shaves off the keyboard from the previous generation, making it 30 percent lighter. The $79 model features some advertising, called “Special Offers” by Amazon. If you want a non-ad-filled basic Kindle, it will cost you $109, which doesn’t make it nearly as good of a deal.
The $79 Kindle’s biggest non-Amazon competition will be the $99 Barnes & Noble Nook Simple Touch. B&N just announced that it would add improved software and a better E-Ink screen that supposedly displays text 25 percent faster than the previous Nook Simple model.
The complete breakdown for materials on the Kindle can be viewed below:
$79 Kindle Materials
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
Like this story? Want to learn more? On April 14-15, our fourth annual VentureBeat Mobile Summit will tackle the six biggest growth opportunities in mobile today. The invitation-only Summit will gather the top 180 executives at the scenic Cavallo Point Resort in Sausalito, Calif., to discuss issues like this. Request an invitation.