It's clear that the public accepts $199 as a fair price for a 7" Android tablet. Amazon.com's management reported today that "millions" of Kindle Fires have been sold in 4 weeks, and demand is rising (probably as holiday gifts.) Analysts predict between 5 and 6 million Kindle Fires will be purchased before year-end.
That's bad news for Amazon in this sense: Estimates of the cost to build the Kindle Fire cluster around $202. So Amazon may lose $3 a tablet, or $15-$18 million. My guess is that the actual cost to build is closer to the sales price of $199 because Kindle Fire production is running such big numbers. In the long run, it's good for Amazon because every Kindle Fire owner will be inclined to use the device to shop on Amazon.com, and to use Amazon's online music and video store.
That's bad news for Amazon in this sense: Estimates of the cost to build the Kindle Fire cluster around $202. So Amazon may lose $3 a tablet, or $15-$18 million. My guess is that the actual cost to build is closer to the sales price of $199 because Kindle Fire production is running such big numbers. In the long run, it's good for Amazon because every Kindle Fire owner will be inclined to use the device to shop on Amazon.com, and to use Amazon's online music and video store.