Braving the Amazon: $79 Kindle costs $84 to produce, will online retailer recoup loss?

Amazon-Kindle-TrioJust last month it was reported that Amazon’s profits were down 73% due to the online company’s heavy investment in its various tablets, including the Kindle Fire, which is set to release on November 15th. Additionally, it was reported that Amazon was bracing itself for the eventually release of its hotly anticipated tablet, knowing it would have to sell the tablet at a $10 loss and recoup that through content that customers purchased. While the impending loss on Kindle Fire hardware sales is no secret, according to a report from MainStreet, with the help of iSuppli, Amazon is also taking a loss on the $79 Kindle.

According to the report, the materials used to make the $79 Kindle total at an estimated $78.59 while the manufacturing costs sits at $5.66, bumping the total to $84.25. It’s important to note however, that the $79 Kindle does come with a host of ads that help ease the majority of the subsidized costs.

Even though Amazon is selling the $79 Kindle at a loss doesn’t mean it’s losing money in the long term. “This is a subsidized device that comes with advertisements that make money for the company and offsets that manufacturing price, giving Amazon its profit margins,” says Rob Enderle, Digital Trends contributor and principal analyst at The Enderle Group.

Of course the strategy being employed by Amazon is a luxury that the company can afford. The ad-sponsored Kindle is the third in its generation allowing Amazon the time to explore various revenue models and price the device at the lowest figure possible. And because the Kindle also sells and directs users to various Amazon services and products; the company is further given the marketing maneuverability to be aggressive as it is being.

Enderle goes on to predict that more and more companies will follow suit and aggressively market their respective e-readers and tablets.

“We’re just starting with this concept and I expect other businesses will follow it as well, “Enderle says.

[Source: MainStreet]

Home Theater

Hulu drops price for entry-level users, hikes price of live TV tier

Hulu lowered prices on its most basic ad-based tier by $2 per month, but has simultaneously raised the cost for those who subscribe to its live TV streaming tier, matching moves by the other major streaming companies.
Mobile

Here's how to convert a Kindle book to PDF using your desktop or the web

Amazon's Kindle is one of the best ebook readers on the market, but it doesn't make viewing proprietary files on other platforms any easier. Here's how to convert a Kindle book to PDF using either desktop or web-based applications.
Business

Apple banned from distributing some iPhone models in Germany

Apple is following the FTC's lead and has sued Qualcomm for a massive $1 billion in the U.S., $145 million in China, and also in the U.K., claiming the company charged onerous royalties for its patented tech.
Cars

Tesla cuts workforce by 7 percent, ends referral program to trim costs

Tesla has announced plans to trim its workforce by seven percent, and it will end the referral program that rewards customers who help it sell cars. These measures are ways to cut costs and boost profits.
Emerging Tech

A.I. finds non-infringing ways to copy drugs pharma spends billions developing

Researchers have demonstrated an artificial intelligence which can find new methods for producing existing pharmaceuticals in a way that doesn’t infringe on existing patents. Here's how.
Emerging Tech

Coinstar machines will let you swap cash for Bitcoin at your local grocery store

Coinstar, the company which owns the coin exchange machines found at grocery stores and elsewhere, will soon let you easily buy Bitcoin with your cash money. Here's how it will work.
Emerging Tech

Facebook hasn’t given up on the idea of building an internet drone

Facebook's efforts to provide internet connectivity from the skies using solar-powered drones suffered a blow last year when the company abandoned its "Aquila" drone project. But the company clearly hasn't given up on the idea.
Emerging Tech

World’s biggest fleet of campus delivery robots now transporting student meals

The world’s largest fleet of delivery robots on a university campus is coming to Fairfax County, Virginia’s George Mason University. Here's how the ordering and delivery process plays out.
Deals

Smart luggage does it all with wireless charger, built-in scale, GPS tracking

The SkyValet smart luggage, currently being funded on Kickstarter, offers solutions to many common travel struggles. With SkyValet, you no longer need separate portable chargers, a scale to weigh your bag, a lock, or a tracking device. It's…
Emerging Tech

The CRISPR baby saga continues as China confirms second gene-edited pregnancy

China’s official Xinhua news agency has confirmed that a second woman has become pregnant as part of a controversial experiment to create the world’s first genetically edited babies.
Emerging Tech

Elon Musk offers to help dig CERN’s new particle collider tunnel

CERN plans to put the Large Hadron Collider to shame with its proposed much larger Future Circular Collider -- and Elon Musk wants to help. Because, you know, he's not busy enough.
Emerging Tech

Once again, a drone has reportedly caused a shutdown at a major airport

Reported drone sightings near New Jersey's Newark Liberty International Airport forced flights to be halted early Tuesday evening. One of the drones reportedly came within 30 feet of an aircraft.
Emerging Tech

Scientists find a way to create a renewable supply of cancer-fighting T cells

In a major advance for "off-the-shelf" cancer therapies, UCLA researchers have shown that it's possible to create T cells with important cancer-killing receptors from pluripotent stem cells.
Emerging Tech

Battery-free biosensor patch measures your health by drinking your sweat

Researchers from Northwestern University have developed a soft skin patch that’s able to wirelessly gather data about the body by testing sweat components. Here's why it could be so useful.