Thanks for this post. It is nice to have the information on the BoM cost of Fire phone. I was amazed to see that while Amazon has prices Fire at @ USD 649, the Chinese manufacture Xiaomi has priced Mi3 at ~USD 249 (in India). There features offered by Mi3 is almost the same as those of Fire. Hence I would assume the BoM cost of Mi3 similar as that of Fire. It would be interesting to have the same teardown exercise done on Mi3... :)
Comparing only the price will not be a good idea for Amazon Fire, this is a special phone that is launched for the Amazon lovers.
As the article says "Amazon has undoubtedly invested heavily in software features that are not included in this BOM costing estimate, most notably the software behind the Dynamic Perspective display feature"
Also the Amazon FireFly is another great feature that comes with this phone. It turns the phone into a scanner that redirects you to the products available on the Amazon store.
Yes but the premium that Amazon is charging, I also think is very high.
>> Yes but the premium that Amazon is charging, I also think is very high.
That is a deviation from the Amazon pricing model of hardware. They used to give it out free and then allow you to give them money through content. But here, the hardware is expensive. This means they are up to something - real phone company.
I think that Amazon may be providing the library of Kindle supported books free along with this tablet. Need to check that, that may be the only reason of high cost. Besides the better software facilities.
Oh may be you are right, but this will not be the strategy of a multinational company to earn profits, all the other giants are also having the same pricing strategies. This is because we are comparing it with Xiaomi it look too much price difference. But if you compare it with any other product from the electronic giants then the price difference is not that huge as such.
Probably has nothing to do with the pixels, as speculated in your teardown. It is more likely based on how we synthesize 3D from multiple cues. People who have the use of only one eye still see the world in 3D. And, the head tracking needs of dynamic perspective seem very similar to this:
See the third project down, the one about 3D? It is uncanny to watch that video, you share the illusion on your screen even though your head is not being tracked. It seems the brain is able to adopt someone else's perspective and create the illusion. Pretty cool.
>> I am sure Amazon is going after the recurring revenue coming from video and product selling from Fire instead of from selling the phone.
That is the business model. The question is why they have to make the hardware expensive to execute that. In the past, they subsidize the hardware to enable the evolution of the monetization of the contents.
@real costs we only cost the Bill of Materials components, Prime isn't a cost associated discretely with the device nor is Mayday. These and other software enabled services are a cost to Amazon (and other vendors to develop and support) and undoubtedly factored into the complete cost of a device or business unit, but are outside our device and IC level costing methodology.
IHS just released its BoM figures and they are in line with Joel's estimates:
"The BOM of the Amazon Fire Phone equipped with 32 gigabytes of NAND flash memory amounts to $201, according to a preliminary estimate by the Teardown Mobile Handsets Intelligence Service at IHS Technology (NYSE: IHS). The cost of production rises to $205 when the $4 manufacturing expense is added."
I think once you know the hardware component then based on the average price you should be able to estimate the BOM. However, what i do not understand in most of the teardowns is the hidden cost estimates that are not considered so that the owner know the true value of the device. Such as how much a given technology is worth in money.
@wilber_xbox you are correct, the component actual cost will never be known to the rest of us. Many times the components are priced based on volume commitments and periodic payments that helps a component vendor meet shareholder expectations. No doubt most component vendors will have tiered pricing structures and also market-specific pricing (as in Asia, EMEA etc) coupled with a cut in SLA's (service level agreements).
>> However, what i do not understand in most of the teardowns is the hidden cost estimates that are not considered so that the owner know the true value of the device.
This is a guidance, I will say. If Amazon places an order for 10 million chips, the price will be different when it is buying say only 1 million units. The expert is providing a guidance and we thank them for that. It cannot be hard science until you know the quantity and discount from the firm.
Also, don't forget the additional costs in manufacturing. Yield and startup costs can be high at the beginning. It is good to see that Amazon will have a profit from selling this hardware, unlike the tablets. They do need some profit for the bottom line.