A new estimate from IHS iSuppli reveals that for every Kindle Fire unit sold by Amazon, the internet commerce giant loses money upfront.
That is because IHS iSuppli estimates that a single Kindle Fire costs $209.63 to manufacture. That is below the $199 that Amazon will be selling the tablets for.
It is not clear from reports if that cost includes other expenses like the cost of shipping the tablet, the manpower needed to sell the tablet, marketing expenses for the Kindle Fire and the like.
According to Reuters, IHS iSuppli says that components cost for the Kindle Fire total to $191.65 hile other manufacturing expenses make up the difference to the final estimate.
This means that each Kindle Fire sold will be an upfront loss of about $10 for Amazon.
However, Amazon is likely betting that Kindle Fire users will buy a lot of products from Amazon, making the Kindle Fire an integral part of its strategy to get customers to buy more from the site through a device that even if they sell for a loss, will recuperate financials through other sales.