We know it wasn't a farcical marketing stunt, after Amazon's Chief Executive Jeff Bezos unveiled the Kindle Fire last Wednesday at a retail price significantly lower than the public's expectations. Some believe its US$199 tag may spark a price war at the lower end of the tablet market, where brands touting Google's Android operating system such as Samsung, HTC Corp, and Motorola Mobility Holdings have been dominating the scene.
Case in point, the Kindle Fire's cut-rate price have since led analysts and investors to speculate that Amazon is retailing the Android-based tablet at cost, and maybe even at a marginal loss. To add fuel to fire, IHS iSuppli, an electronics technology research firm, recently arrived at an estimated figure of US$209.63, which includes components costs and additional manufacturing expenses as incurred by the 7-inch tablet. If the estimates are true, this also implies Amazon may lose about US$10 for every Fire tablet sold.
However, the Kindle Fire could also stimulate demand for Amazon's digital content and physical goods, which may help the company recoup its losses. "When further costs outside of materials and manufacturing are added in -- and the $199 price of the tablet is factored along with the expected sales of digital content per device -- Amazon is likely to generate a marginal profit of $10 on each Kindle Fire sold," the research firm added.