Teardown reveals production costs of Amazon's Kindle 2

By on April 22, 2009, 4:34 PM
ISuppi has revealed the estimated manufacturing costs of yet another widely popular electronic device, Amazon’s Kindle 2. After performing a “teardown”, the firm concluded that each Kindle 2 runs approximately $185.49 to produce in-total, or 52% less than its MSRP of $359.


Engineered to conserve battery life and reduce eye strain, E Ink’s $60 display module is said to consume the greatest cost-percentage (41.5%) of any other component on the bill of materials. This isn’t a surprise given the display’s electrophoretic bistable technology, which allows it to show an image regardless of whether or not power is present. It also supports 16-level grayscale images, whereas the previous Kindle supported a mere 4-level. Ditching the first-generation’s integrated wireless chipset, the next greatest cost factor in the Kindle 2 is Novatel Wireless Inc.’s $39.50 turnkey wireless broadband module.

Although it’s easy to deduce that the Kindle 2’s profit margin is pretty large, iSuppli’s analysis is forced to negate the costs associated with intellectual property, royalties, licensing and other fees.




User Comments: 2

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jtc2112 said:
It's worth saying that the Kindle and Kindle 2 was in a development for a while. So I'm sure there was a lot of payroll and overhead costs that need to be recouped from the years that it took to take this from an idea to something you can hold in your hand. Not to mention the cost to the rights for the content.
Matthew said:
I agree that there are definitely some additional figures that probably offer more justification to the MSRP. I did mention something of that nature at the end:"Although it’s easy to deduce that the Kindle 2’s profit margin is pretty large, iSuppli’s analysis is forced to negate the costs associated with intellectual property, royalties, licensing and other fees."
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