Amazon Inc's Kindle Fire, within just a week of its announcement, has analysts passionately speculating on the possibility of the 7-inch tablet making either a profit or a loss.
One among the many such speculations and rumors is a recent virtual teardown of the Kindle Fire by UBM TechInsights, which suggests that the tablet's manufacturing cost stands at $150. In addition, according to a report from Complex, Amazon is spending a maximum of $60 on the Fire's multi-touch display.
All this means that if the cost of making the Kindle Fire is along the lines of those revealed by UBM, the Seattle-based online retail giant could be set for huge profit figures, both from sales of the device as well as that of the digital content it offers.
This can be viewed as a major blow to all Android tablet manufacturers who really have no way to compete since the channel mark-up would require companies put their tablets at or below cost to beat the Kindle Fire price--and they still all lack the content that the Amazon storefront has, said Jeffrey Brown, Vice President of Business Intelligence, at UBM TechInsights, in a report by EE Times.
Though the UBM speculation differs from previous cost speculations, as carried out by Gene Munster, the Managing Director and Senior Research Analyst at Piper Jaffray and iSuppli Research, the general result of all three speculations was that the Kindle Fire will prove to be a profitable business venture for Amazon.com
Earlier, Munster had suggested that the cost of production of the Kindle Fire would be, approximately, $250; leading to an approximate loss of $50 per device, a figure that Amazon could, potentially, more than make up, with sales of digital content and physical goods from the Amazon Web site.
The iSuppli report reduced Amazon's potential speculated loss to $10.63, as its virtual teardown suggested the tablets cost $209.63 to make. iSuppli indicated that Amazon, again by virtue of extra content, could make razor-thin profits.
All three reports do seem to suggest that Amazon will make profits. However, the exact figures will only be known once Amazon releases the Android-based device, as well as the precise teardown values.