Kindle Fire HD, Microsoft Surface teardowns reveal production costs for Amazon, Microsoft

November 5, 2012

    Last year, IHS found that the original Kindle Fire cost Amazon around $187 to make and now they have taken on the new Kindle Fire HD to see exactly how much it Amazon pays to build one. The company redesigned the new Kindle Fire HD and IHS tore down the device to see exactly what’s inside. The results are quite interesting.

    While it’s selling for only $199, IHS revealed that the components used to build this new device cost somewhere around $165. Unlike last year, LG Displays produced the new high resolution 720p display; Texas Instruments helped out with the power supply, video chips, and the new blazing fast dual-core processing chip; while Samsung, after Apple essentially stopped using them for many of their iPad/iPhone components, was able to get a deal with Amazon to supply the memory chip in the new Kindle Fire.

    The end result of all these components coming together is a great tablet that many reviewers have recommended for parents and students alike. In today’s competitive market, Google and Amazon are going head to head with their tablets and, while the Nexus 7 seemingly has cheaper components, it seems safe to say that Google’s baby is outselling Amazon’s.

    The same AllThingsD article mentions the Microsoft Surface’s component estimated value, as submitted by the same IHS. Unlike Google and Amazon, Microsoft is apparently not interested in creating a budget-friendly tablet, but rather, the company priced the Surface unnecessarily high to compete directly with Apple’s iPad.

    IHS’ check of the Surface shows that the components that are being used to build the new tablet, when all put together, cost around $271. Now Microsoft could have easily priced their tablet at $300 or even $400 and still have had pretty good profit margins from it while, simultaneously, boosting the user base of the newly released Windows 8 OS — obviously that is not the goal.

    The research firm also found that the new Microsoft Touch Cover, priced separately at $120, costs Microsoft around $16 to produce, and so they will undoubtedly enjoy the extra profit. This goes to show how much more customer-oriented the Nexus 7 and Kindle Fire HD are in comparison to the Microsoft Surface that seems mostly profit-oriented.

    Now the question comes in, which of these tablets are you going to purchase this holiday season?

    Comments

    • Peterson Silva

      “The research firm also found that the new Microsoft Touch Cover, priced separately at $120, costs Microsoft around $16 to produce”

      Capitalism never ceases to amaze me…

      • http://twitter.com/Spice_002 Spice

        And if we let those damn socialists have their way with this country, those tablets would be free for everyone! Damn Commies!

      • Luis Augusto Fretes Cuevas

        These “analysis” are absurd, since they don’t include R&D costs.

        • http://www.facebook.com/omonrise Arseny Starostin

          yeah the analysis takes only the parts costs. Still, even if you multiply it by 3 (implying materials cost = RnD = labour cost which is probably not even true) you would still get a price more than twice lower than what they are offering

    • sluring

      “which of these tablets are you going to purchase this holiday season?”

      Neither

    • Dave McGuire

      Nexus 10. But not just for cost savings. I like the Android Os and while Acer make a kick ass android tablet, they just cant compete with the update speed of pure Android devices.

    • Sara

      Tablets made from whatever company isn’t so bad, so long as its not an idevice. Apple take capitalism to a whole new level (or two levels) by jacking up prices by like 400%. I’d rather spend my money buying a kindle than a pricey iPad

      • Apple_Nexus

        iPad Mini Bill of Materials cost $188. So according to you Apple charge $752 ?? Apple’s website lists the iPad Mini at $329 which is not even 200% markup but don’t let facts get in the way of your Apple hate.

        http://www.isuppli.com/Teardowns/News/Pages/Low-End-iPad-mini-Carries-188-Bill-of-Materials-Teardown-Analysis-Reveals.aspx

        • http://twitter.com/MysteryMannnnn Mystery Man

          She was referring to every single iPhone they have ever made which indeed has a 400% mark up. Oh also iPad Mini for instance get off the 16gb base price and look at the increased memory options. $100 for 16gb of flash memory is a 1000% mark up in itself

    • https://play.google.com/store/apps/details?id=com.ootpapps.saving.made.simple&feature Out of the Park Apps

      Right, $120 for a Microsoft Touch Cover. Right, and I’m not an Android.

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