According to an estimate by research firm IHS iSupply, Amazon’s Kindle Fire tablet costs about $209.63 to produce. That’s $10 more than the surprisingly low retail price that Amazon announced of $199 and not quite as a bad as the $50 loss per tablet that analysts have suggested previously.
IHS iSuppli calculated the components cost for the Kindle Fire to be around $191.65. Adding to that other manufacturing expenses, the firm reached a total estimate of $209.63. Although Amazon is set to lose $10 per tablet, the company is betting on the increase in sales of both its digital and physical goods to make up for the loss.
“The real benefit of the Kindle Fire to Amazon will not be in selling hardware or digital content. Rather, the Kindle Fire, and the content demand it stimulates, will serve to promote sales of the kinds of physical goods that comprise the majority of Amazon’s business,” said IHS iSuppli in a statement.
IHS iSuppli also estimates that with the additional revenue it can generate from digital content by putting the Kindle Fire tablet into more hands, that Amazon could actually get a marginal profit of $10 per tablet sold. For more details on the Kindle Fire as well as the two new Kindle e-readers that Amazon launched this week, make sure to check out our wrap-up post.