Amazon Really Does Lose Money on Every Kindle Fire HD (But Microsoft, Not So Much)

By Brian Barrett on at

Fresh on the heels of an iPad mini teardown that revealed £118 worth of components, IHS has pegged the Kindle Fire HD bill of materials at £103-odd. That means that only about £15's worth of hardware separates devices with £110 price tag differential. Yeesh.

It was no surprise that the Kindle Fire HD was at best a break-even proposition for Bezos & Co., but that £160 price tag looks even more unhinged when you consider all the research and development and marketing costs that aren't counted in that £103 figure. Consider that there's a £151 gap between Apple's iPad mini bill of materials and its sticker price. That distance, for Amazon, is just £57.

Microsoft, meanwhile, rings up a £170 components bill for every £400 32GB Microsoft Surface it pumps out. That gap makes sense especially given Microsoft's lack of a wildly profitable content business, which is how Amazon justifies its kamikaze Kindle pricing. Microsoft's advantage is even more pronounced when you factor in its Touch Cover, which retails for £100 when bought separately, and contains about £10 worth of parts. [AllThingsD]