Amazon may be taking a loss on the production and sales of the new Kindle Fire tablet-style device, according to industry research.
IHS iSuppli research has concluded that the Fire will cost $209.63 to produce. Despite that figure, the device has been priced for retail at $199 – which results in a $10.63 loss per unit for the company.
The primary reason for the low price point, and the development of the Fire in general, may be to deliver Amazon media products to consumers. Although a profit from the sales of the device would be ideal, by undercutting many other market players, the company may both boost revenue through an increase in digital media delivery and create an instant best-seller with its initial tablet launch.
"The company is willing to settle for a razor-thin margin on sales of devices and digital content in order to achieve the larger goal of promoting merchandise sales at its online store," noted the research company.
If the Fire proves to be as popular as the original Kindle, a popular e-reader, Amazon may also profit in the future from the sales of mobile accessories and new, higher-priced tablet offerings.