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Originally Posted by Kali Yuga
Heh... Yeah, that's one of many problems with these "teardowns." People with no sense of manufacturing read it and think "wow, it cost $10 to make and they charge $100, we're getting ripped off." People don't usually consider all the associated costs: R&D, legal, taxes, customer service, marketing, retailer's cut (if applicable) etc etc.
I.e. knowing that a Kindle is allegedly made of $185 in parts doesn't really provide much accurate information about how much it really costs, or what profit Amazon is making on these things.
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Its pretty interesting (well, maybe just to me) to track Amazon's R&D spending-
2004: $251 million
2005: $451 million
2006: $662 million
2007: $818 million (Kindle 1 released in Nov.)
2008: $1 billion
2009: Kindle 2, Kindle DX released
Up until recently, Amazon's R&D has increased pretty steadily without seeing a commensurate payback in operating income-one of the big criticisms of them in the past.
I'm guessing its because they have invested heavily in the Kindle/eBook transition, and just haven't reaped the benefits yet. One thing about Bezos, he certainly thinks long-term.