IHS Research Firm Reports the Amazon Kindle Fire is Losing Money at $199

The Amazon Kindle Fire which has started shipping this week for $199 per unit. Independent research agency IHS announced that at $199 Amazon is taking a loss on the Kindle Fire which it says cost $201.70 to make. The estimates by IHS includes the cost of all components and assembly but does not include research and development costs or the costs of marketing and packaging.

Amazon sought to keep cost of the tablet low at release and have led some analyst to speculate that Amazon Inc. will need to rely on sales of eBooks and other software for the tablet in order to turn a profit. Amazon was able to keep the price down by sticking with the 7-inch screen and eliminating the camera and microphone. As a comparison the Apple IPad base model cost just under $300 make while Apple sells the base model of the IPad from $499.

Amazon CEO Jeff Bezos said the company’s goal was to make a small profit from the hardware and was willing to live with a smaller profit margin than most of the larger electronics companies. Bezos stated “We want the hardware device to be profitable and the content to be profitable. We really don’t want to subsidize one with the other.”

About Amazon.com Inc.

Amazon.com, Inc. operates as an online retailer in North America and internationally. It operates retail Web sites, including amazon.com and amazon.ca. The company serves consumers through its retail Web sites and focuses on selection, price, and convenience.

written by

Kyle Pinder has has over five years trading and research experience in the large cap space. While still in grad school, Kyle trades daily and keep Active Investor up to date with the latest breaking news coming out of Wall Street and Washington.

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