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.