Friday, April 24, 2009

How much does it cost to make a Kindle?

Source: PublishersLunch, Friday, April 24, 2009: On Wednesday iSuppli put out a press release saying they had calculated that price of the raw components that comprise the Kindle 2 as approximately $185 dollars, with the e-ink screen ($60) and wireless communication module ($40) the two most expensive parts. In a rare comment, cfo Thomas Szkutak insisted in a conference call including a NYT reporter that "the production cost was significantly higher than that." And that does not include allowances for wireless communication costs, packaging, freight, customer service, technology/development, advertising/promotion and many other costs (never mind the opportunity cost of the prominent site home page space given to Kindle over any other product offering, and the small loss per unit takes on new and bestselling Kindle books sold below actual publisher wholesale cost). For comparison, the AP says Apple's iPhone 3G costs $174 to build and lists for $599 to $699 without a service contract. (Amazon's gross margin across North American sales was 26.9 percent.)

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