How Amazon Managed to Cut the Cost of the Kindle Fire Tablet

Amazon Kindle Fire $199Just a few days ago Amazon finally released the Kindle Fire. This new tablet was eagerly awaited by tablet readers and electronic lovers alike due to the wide range of features it had. On the day of its announcement Amazon’s main competition, the Nook by Barnes & Noble, took a huge hit on their stocks with a 7% decrease in just one day. Ever since the announcement rumors and specs about the Kindle Fire have been flying around the internet and the release has been long awaited to confirm and deny the rumors.

One of the rumors that had been circulating the web like wildfire was that the Kindle Fire cost Amazon more to make than they were selling it for! This crazy speculation was doubted by many but there was still a strong support for it due to the fact that the cost of the tablet was only $199.  Now that all of the nitty gritty details have been released however, we can confirm that the rumor about the cost of production was indeed true!

The estimated cost of production for the Amazon Kindle Fire is about $201.70 while the retail of it is only $199. So what exactly was Amazon’s plan in producing this tablet and how did they manage to reduce the cost for themselves? Well let’s find out.

First le’t see some of the Kindle Fire specs. The tablet comes with a 7″ IPS multi-touch display, a 1GHz  TI OMAP dual-core processor, 512 of RAM and 8 GB of internal memory. As connectivity features Kindle Fire comes with Wi-Fi(802.11 b/g/n), 3.5 mm jack port and USB 2.0. Even if it comes with accelerometer sensor, the tablet still lacks some important features: microSD support, Bluetooth, 3G, GPS and light sensor.

Amazon’s main competitor was the Nook Color and the iPad. Both of those devices have some big names behind them and are also quite pricey. Apple products are often priced significantly higher than what it costs Apple to produce them however the loyalty of Apple consumers is what keeps their products in high demand. The Nook Color however was nowhere near as advanced as an iPad but it offered significantly more features than the Kindle with a slightly higher price tag.

When Amazon decided to produce the Kindle Fire its aim was to draw from a wide consumer group. Not only did it hope to undermine all of its competition with the incredibly low price of the Kindle Fire, but it hoped to lure others away from much pricier products such as the iPad due to the fact that the Kindle Fire has almost all of the features as the iPad does.

With their game plan in mind Amazon knew that if it succeeded in drawing in a large demand for the Kindle Fire then it could circumvent the losses it was taking with the production of the Fire and make up for them with all of the extras that consumers would purchase such as music, apps, books, and more.

So how exactly did Amazon cut down on the price of the Fire? First off they reduced the memory capacity from 8GB (which is what most tablets have) to only 4. After that they didn’t include any fancy features such as a camera, Bluetooth, and more. Once the basic hardware features were slimmed down, Amazon went after the shipping costs that were often passed down to the consumers. Instead of including a plethora of extra gizmos in high tech disposable boxes, Amazon included only the bare essentials, reducing the shipping cost to about $2-$3 per device.

So will this move pay off for Amazon? Only time will tell!

Source: Allthingsd


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