The cost of building a kindle 2 (without the whispernet)

[kaas]

a nice article from www.gizmodo.com:

----------------------------------------------------------------------

iSuppli: The Kindle 2 Costs $185.49 to Build



According to an iSuppli teardown, the Kindle 2 costs $185 to build—or about half the device's $360 sticker price. That's $176.83 in parts, $8.66 in construction costs. Here's the major component breakdown:

E Ink Display (by E Ink)
$60

EVDO (by Novatel)
$39.50

Baseband Processor (by Qualcomm)
$13.18

8-Layer Printed Circuit Board (by Multek)
$9.83

532MHz Multimedia Application Processor (by Freescale Semiconductor)
$8.64

Battery (by LICO Tech)
$7.50

Main Enclosure
$4.45
---------------------------------------------------------------

I wonder what Amazon has to pay for whispernet...

cheers,

kaas



p.s.: here a list from engadget with the epson controller!

[JSWolf]

One cost left out is the Epson display controller.

[kaas]

seems you are right

cheers,

kaas

[daffy4u]

Gizmodo, points out this cost doesn't cover R&D or shipping. It also doesn't cover labor which though they may be cheap in China still add to the cost. Or packaging. Then there is the storage and shipping within the U.S. (a lot were shipped free).

Whatever Whispernet costs on top of all of that, it seems to me that the Kindle 2 may not have a very large profit margin especially since it seems some of that profit is used to subsidize the lower cost of Kindle books.

[kaas]

actually it does point out the labor:

$8.66 in construction costs

cheers,
kaas

[HarryT]

But what it does NOT include is the cost of developing the firmware which is, I suspect, by far the most expensive component.

[daffy4u]

Originally Posted by kaas

actually it does point out the labor:

$8.66 in construction costs

cheers,
kaas

Yep, missed that.

[HarryT]

Where does the $60 figure for the screen come from? eInk charge device manufacturers about $150 for a replacement screen and controller.

[sirbruce]

I was about to post the same thing. I doubt you can get the EInk display for $60. Remember that Amazon is even using a new 8 bit greyscale controller which isn't even off-the-shelf yet.

[Moejoe]

Correct me if I'm wrong, but wouldn't the $60 figure be in volume or bulk orders?

[sirbruce]

Originally Posted by HarryT

But what it does NOT include is the cost of developing the firmware which is, I suspect, by far the most expensive component.

You normally don't include those costs in COGS (Cost Of Goods Sold). I think you'd have to include the cost of the Sprint wireless service, though.

[kaas]

While the Firmware developement is part of capex, whispernet is opex and should be of greater impact to totex (especially with several 100K units sold!).
And I am sure that e-paper displays are quite a bit cheaper in bulk, especially for a large company like amazon which is willing to order upwards of 200K+ of them...

cheers,

kaas

[Jellby]

Hmm... why not calculate the cost of the raw materials instead? Sand for the silicon and glass, petroleum for the plastics... I reckon it's no more that $10 per unit

[kaas]

Isuppli usually calculates with achievable costs for bulk products...

[wallcraft]

Originally Posted by Moejoe

Correct me if I'm wrong, but wouldn't the $60 figure be in volume or bulk orders?

Yes, and Amazon may be buying a million screens this year. This figure sounds about right to me, don't forget that PVI is ramping up production and can make many more screens this year than last and that usually implies a lower unit cost.

As JSWolf points out, the Epson controller is missing from the parts list. I don't know what it costs, but it is significant that almost all the new EInk devices (except the very low end ones) we are hearing about will be using the Epson controller. So it can't be very expensive.