About

On this blog we will track down the latest Amazon Kindle news. We will keep you up to date with whats hot in the bestsellers section, including books, ebooks and blogs... and we will also bring you great Kindle3 tips and tricks along with reviews for the latest KindleDX accessories.

Recent Comments

October 2011
M T W T F S S
« Sep   Nov »
 12
3456789
10111213141516
17181920212223
24252627282930
31  

Kindle 4 Cost Breakdown

Recently Andrei managed to thoroughly break a perfectly good new Kindle 4 in his quest for ever more complete understanding of what’s going on inside our favorite devices.  The information and photos accompanying these posts got me thinking about Amazon’s new pricing gambit.  There’s a lot of focus right now on how cheap the Kindle Fire is being sold at, especially in light of the fact that recent reports have Amazon selling it at a loss, but nobody is really talking much about the fact that there is now a fully functional eReader connected to a major platform available for only $80.

Are they still making any money at all, or is this Kindle even more heavily subsidized than the Fire?  Let’s look into it a bit.  I’m not claiming any inside information beyond a working knowledge of searching the Internet, but what I found was fairly interesting.  The component list is based on the disassembly I mentioned:

  • 6″ E INK Display – ED060CF(LF)T1 REN60B7075(C62)
  • ARM Cortex-A8 CPU – MCIMX508CVK8B N78A 8TFC1130E
  • WLAN 802.11 b/g/n – Atheros AR6103T-BM2D 26AR0620.142D PAF284.1B 1126
  • Flash – SanDisk SDIN502-2G
  • Memory – Hynix H5MS2G22AFR E3M 129A
  • E INK Controller(?) – Winbond W25Q40BV
  • Power Management Chip – Texas Instruments SN92009 A4 TI 18IG2 AOR5 G4
  • Battery Controller – Freescale MC13892AJ CQQD129D
  • 30 Day Lithium Polymer Battery – 3.7V, 890mAh, MC-265360
  • Aluminum Case

Some of this was hard to find.  Other bits, like the Atheros AR6103T, don’t really seem to exist as far as the internet is concerned.  Where necessary I’m using best guesses, product families, and superficially equivalent parts for comparison.  After a bit of inquiry, here are the numbers I’m coming up with:

  • Display: $48 (Based on similar 6″ E INK Displays, no bulk pricing calculations)
  • CPU: $13
  • WLAN: $6 (Based on Kindle Fire breakdown by iSuppli. May be cheaper here since performance matters less)
  • Flash: $2.50 (Assuming similarity with previous models)
  • Memory: $1 (Researched as low as $0.01 in bulk orders.  Rounding up)
  • E INK Controller: $9
  • Power Management: $4 (Assuming similarity with previous models)
  • Battery Controller $3.50 (Rounding up from $3.32/1000 units.  Probably cheaper in batches of millions)
  • Battery: $3
  • Case: $5 (Assuming slightly more expensive than older Kindle models based on materials used)
  • Manufacturing Costs: $8 (Based on iSuppli Kindle Fire breakdown)
  • Other Materials: $10 (I’m sure I missed something)
    • Total Costs: $113

Given that I have done my best to be extremely conservative in these estimations, this should probably be considered an upper limit of the actual device costs.  Amazon will probably be quite a bit better at finding component discounts at this point than I am after my 48 hours or so of experience.  Even so, given that the basic model with no Special Offers integration is going for $109, I think I got pretty close.

One of the biggest things that I think we have to keep in mind with this new Kindle is that there is every indication this device is not meant to be serviced under any circumstances.  According to multiple reports so far, it is almost impossible to open the case without damage even if you know exactly what you are doing.  Even if that is accomplished, there was more glue used in this Kindle than makes sense.  It is clearly not meant to be serviced, either by customers or by Amazon themselves.  That means it has to be cheap enough for outright replacement of the hardware in the case of necessary servicing, with salvaging of little more than the E INK screens likely.

With this information, I think it is safe to say that Amazon won’t be throwing any money down a hole by subsidizing the Kindle 4.  They have gone above and beyond to build a new generation of the line that is far more cost effective than before while still offering maximum reading functionality.  Some money was definitely able to be saved by the exclusion of audio and touchscreen capabilities as well, of course.

The largest expense remains the E INK screen, but since this is the essential component of what makes a dedicated eReader worth having, it is hard to underestimate the importance.  You really can’t do without it and as yet I haven’t heard of any worthwhile substitutes.  For the moment this may mean that any further price drops will rely on the success of Kindle-based advertising.  With the baseline model already available for under $100, though, there’s not really much room left to complain about price.

Verdict: Amazon doesn’t loose money on Kindle 4 non-touch. Even with retail component prices, manufacture costs come very close to what device sells for. Kindle with special offers has been around for a while so it is safe to assume that Amazon know how much money they are going to make from advertising in the long run and it is reflected in $30 discount and the fact that you can remove special offers from your device for the same price of $30. It also seems that there is still room left for price reductions in the future.

5 comments to Kindle 4 Cost Breakdown

  • tank

    Is the price of display for pearl eink?

  • Andrei Pushkin

    It is

  • Shebnik

    I wonder how many of Kindle users actually use audio.
    I have one, but don’t use text to speech. For other else I have Google Listen and TuneIn Radio on Android phone.

  • cargath

    Seriously, people need to stop taking things apart like this. It’s not how it works. A device like this is worth more than the sum of its parts. There’s shipping costs, development costs and stuff like that.

    One question, your listing the case as “Aluminum Case”. Is that right? I thought it was just painted plastic.

  • Andrei Pushkin

    Nope. The case is aluminum – try cutting it…

Leave a Reply

 

 

 

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>