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JAK620
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re: Kindle Fire profitable at estimated $150 BoM
JAK620   9/28/2011 11:03:27 PM
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The hardware profitability may be low but I think that key is that the tablet brings the Amazon store-front, which we usually access on a PC, to the tablet screen. That should be the main target of profit instead of the hardware. Amazon is not directly competing w/ Apple on the hardware-feature front but more on its price and Amazon's broad service and catalog.

Neo10
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re: Kindle Fire profitable at estimated $150 BoM
Neo10   9/29/2011 2:44:22 AM
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Now imagine if they start a movie/music subscriptiion like Apple does then they would give stiff competition. Hadrware is the key enabler but the profits lie in software services. So they appear to have got the equation right.

the lavender fan
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re: Kindle Fire profitable at estimated $150 BoM
the lavender fan   9/29/2011 11:56:22 PM
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Music subscription makes sense now, but movie subscription doesn't look appealing yet with the 7" LCD Kindle Fire.

yalanand
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re: Kindle Fire profitable at estimated $150 BoM
yalanand   10/2/2011 3:39:35 PM
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@Neo1 good point. Do you think kindle will affect the profitability of companies like Netflix who primarily benefit from selling movies online.

Sanjib.A
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re: Kindle Fire profitable at estimated $150 BoM
Sanjib.A   9/29/2011 3:08:04 AM
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I think Amazon is betting on the volume for Kindle fire. With the price tag set at $199, it is expected to be sold in large volume. People who are hesitate at shelling out $500 on an iPad but need a handy tab (like me :)), will definitely think about buying it. Though I don't think iPad is going to give-up market share to Kindle Fire as the features doesn't compare "apple to apple" and the people who wants to get an iPad will still buy it. Kindle Fire seems to have a good potential to dominate the low cost markets.

markhahn0
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re: Kindle Fire profitable at estimated $150 BoM
markhahn0   9/29/2011 3:17:16 AM
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even if Amazon does nothing but extend the Kindle market, they've got a huge winner. I think the real question is whether they'll try to discourage the modders...

wilber_xbox
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re: Kindle Fire profitable at estimated $150 BoM
wilber_xbox   9/29/2011 1:14:40 PM
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well, i calculate the profit margin other way: Amazon is making 50USD for 150USD i.e. 1/3rd profit. Now if Apple is making $200 for $300 then its 2/3rd profit....so kindle is making half the profit of what Apple is making...Dollar of Dollar. Remember that Apple's products are usually high profit margin.

yalanand
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re: Kindle Fire profitable at estimated $150 BoM
yalanand   10/2/2011 3:38:02 PM
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@Himanshu, you are right Kindle is making half the profit but look at the sales volume. More and more people will buy kindle because its available at low price.Moreover it would be easy for amazon to market its tablet.

elctrnx_lyf
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re: Kindle Fire profitable at estimated $150 BoM
elctrnx_lyf   9/29/2011 6:39:41 PM
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does this tablet is coming without camera and other wireless interfaces or it is designed with some lower features. Looking forward to see the complete tear down and comparision with play book. Certaily ti is gaining a good traction now.

richard.neveau
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re: Kindle Fire profitable at estimated $150 BoM
richard.neveau   9/29/2011 10:37:34 PM
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I always thought someone was losing money on TI/Digikey PandaBoard and BeagleBoard XM but looks like with no LCD even those two boards might have some (tiny) margin.

Silicon_Smith
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re: Kindle Fire profitable at estimated $150 BoM
Silicon_Smith   9/30/2011 5:53:27 PM
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I agree. And I doubt if beagle and panda are an actual offering from TI. Makes it impossible for them to have a subsidised model.

eewiz
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re: Kindle Fire profitable at estimated $150 BoM
eewiz   9/30/2011 4:17:54 AM
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Most people who buy fire will subscribe to Amazon Prime at 79$ for the content. And those who prime subscription shop more (regular stuff) compared to people without prime. Another way amazon has justified the low upfront cost.

peralta_mike
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re: Kindle Fire profitable at estimated $150 BoM
peralta_mike   9/30/2011 4:05:31 PM
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I currently have a kindle. (old keyboard type = $139 Kindle). Since July 2011 I have bought roughly about 100 books at 1 to 8 dollars each. Say average is about $2/book (most books I buy are either $0.99 or $1.99 but some up to $8 when I really want the e-book). If I'm an average Kindle and e-book buyer then this translates into approximately $140 that Amazon has made from me on e-books alone (so far). (On e-books Amazon makes 65% and 35% is royalty to the authors of the e-books.) So Amazon will be making much more on the contents (e-books, mp3, movies, magazines, etc.) than on the devices themselves. I have to admit, Jeff is a business genius. God willing, I plan on getting a Kindle Touch for Christmas 2011.

Bill Teasley
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re: Kindle Fire profitable at estimated $150 BoM
Bill Teasley   9/30/2011 5:01:42 PM
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If the dollars in this article are correct, the profit margin for Apple is ~30% and for Amazon is %25. That's not as much difference as the article implies, nor unmanageable. The real story is that Amazon has done a fine job of creating a small, entry level tablet with just the right mix of features. Now they can price it at $199 so it's a practical gift. $499 is too steep to drive the same volume. Any other manufacturer could have done the same, but they don't have the content - that's the biggest part of the story. No magic here, just good engineering and good leveraging of core value.

Silicon_Smith
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re: Kindle Fire profitable at estimated $150 BoM
Silicon_Smith   9/30/2011 5:57:15 PM
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Totally agree with how Kindle leveraging it's core strength is a winner for them. That is not so true for all the other players trying to venture into the tablet market.

ReneCardenas
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re: Kindle Fire profitable at estimated $150 BoM
ReneCardenas   10/3/2011 3:21:03 AM
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I agree with the premise that despite the missing features presnet in higher end tablets, this fire will burn hotter for the lower entry cost, there is some genius in Bezos despite the haters. Great to see this presure push others to improve on their pricing the higher end tablets, to remain viable in this though market enviroment.

eric perlberg
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re: Kindle Fire profitable at estimated $150 BoM
eric perlberg   10/3/2011 12:24:49 PM
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LIke others I feel this tablet is more oriented as a distribution and media consumption device for Amazon products than a front on competition to Apple's iPad, It does create massive problems for anyone else making an Android based tablet. Amazon may well amortise the cost of this tablet over 18 months or longer (a lifetime for mobile products) because it will essentially continue to perform its primary functions as portal to Amazon. One could say that a customer buying one of these is basically subsidising Amazon's revolution in product distribution. It's clear that by running only smartphone apps its not really designed to run sophisticated tablet apps and I can't see Amazon trying to get Android 3 or 4 onto their tablets. More likely is they buy WebOS and take control of the OS themselves. Anyway good on Amazon for innovation and disrupting the now boring Android tablet market.



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