Kindle 4 cost analysis

[Blog Kindle]

Just published Kindle 4 manufacturing cost breakdown.

Bottom line is that Amazon doesn't loose money on manufacturing K4NT even if you use retail component prices. The margin may be thin but it is still there.

In a way tech gadgets is the only group of goods that is immune to inflation - they drop in prices much faster than the currency inflates

[Barty]

I don't exactly lose any sleep over whether amzn is making money on these things. I'm pretty sure they are NOT paying retail component prices, with the huge orders they have.

They're making money, even with r&d and marketing etc. Bezos says the hardware unit is expected to make money on it's own. No charity.

[geoffwood]

Interesting to see how little is spent on Memory and Battery ($6.50 at retail, I'm sure Amazon pays much less). Clearly the downgrades in both areas were more about market differentiation against the Touch than real cost saving.

[RainingLemur]

Originally Posted by The Article

According to multiple reports so far, it is almost impossible to open the case without damage even if you know exactly what you are doing. Even if that is accomplished, there was more glue used in this Kindle than makes sense. It is clearly not meant to be serviced, either by customers or by Amazon themselves.

For one reason or another, I laughed way too much at the "more glue used than makes sense" line.

[tubemonkey]

Originally Posted by RainingLemur

For one reason or another, I laughed way too much at the "more glue used than makes sense" line.

I remember way back when of always using more paste than the rest of my class and the teacher couldn't understand why. Then one day, she caught me eating it. Mighty tasty that paste was.

[Blog Kindle]

I made a mistake in memory chip ID in the disassembly post. K3NT actually has 256mb like the rest of the Kindles. No downgrade there

[Mike L]

Hi BK,

I don't want to denigrate your hard work in collecting these figures, but I can't see how you can possibly reach any conclusions from them.

All you have done is to add up the retail prices of the components. That's not the slightest bit relevant to the cost price of the product, for two reasons:

1. There's no way Amazon is going to pay anything remotely like retail prices. They buy in huge quantities, and the prices they pay will reflect this.

2. On the other hand, you have ignored all the other costs involved in manufacture and distribution: labour costs, plant and equipment, research, marketing, packaging, transport, ... etc.

It's just possible that these two discrepancies will cancel each other out, but you can't know that, so any conclusions you draw can only be a guess.

[tank0]

Originally Posted by Blog Kindle

I made a mistake in memory chip ID in the disassembly post. K3NT actually has 256mb like the rest of the Kindles. No downgrade there

So you have to correct the value in your disassembly post of your website, not only in this post

As lots of people get the value from your post.

[Blog Kindle]

tank0,
I fixed the original post too.

Mike L,
Manufacture costs were factored in. It's hard to factor in R&D because it depends on the number of devices sold which is a huge unknown even for Amazon.

The point of the post was to show that Amazon definitely doesn't lose money on manufacturing these devices. That is why maximum estimates where used (retail prices).

[tank0]

Originally Posted by Blog Kindle

tank0,
I fixed the original post too.

Mike L,
Manufacture costs were factored in. It's hard to factor in R&D because it depends on the number of devices sold which is a huge unknown even for Amazon.

The point of the post was to show that Amazon definitely doesn't lose money on manufacturing these devices. That is why maximum estimates where used (retail prices).

Still has wrong number in this post
http://blogkindle.com/2011/10/kindle...embly-part-ii/

Memory is Hynix H5MS2G22AFR E3M 129A which is 128 megabyte module (Kindle 3 has 256 megabytes).