Piper Jaffray estimates Amazon will lose $50 per Kindle Fire

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  • Reply 21 of 233
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by poke View Post


    Anybody who thinks Amazon loses money on these things is insane. Who the hell loses money on a high margin product (tablets) in order to support a no-margin business (online retail)?



    Amazon. I can believe that they are trying this on for size. I just don't believe it will succeed in making them money.



    And so far, except for Apple, there is no evidence to show that anyone making tablets is making a penny on those sales. With Apple's 30% GM on iPads, which I believe to be true, it should be very difficult for anyone else to make money. This is why we see the Motorola Zoom 32GB 3G model debuting at $800; $71 MORE than Apple's model. It's also why we see the 7" Playbook retailed at $500; the same as Apple's 9.7" version. Same thing for the first Samsung 7" Tab at $500. First tier manufacturers try to make quality products, and that will cost them more than it costs Apple, but how much can they charge?



    So I see Amazon hoping that somehow, they can make up this $50 with increased sales. I don't think it will work though, as their net margin (profit) last year was a measly 3.37%.



    But Amazon has long put its potential profits back into the company. It could be doing that here. Hey, if people buy an additional $2,000 a year from them, it might work.
  • Reply 22 of 233
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by bettieblue View Post


    Better yet, like today's Kindle that uses a gimped version of Andriod, it will come pre-setup with your amazon account and NOT need any kind of PC to get going...unlike the iPad.



    1) You fail to miss the irony that the most popular Android-based tablet will be forked, closed and propriety version of the OS, not the almighty¡, open source OS you think will dominate the consumer market.



    2) There is no Kindle device today that utilizes Android OS in any way. There will be one in mid November which will likely be a month after Apple releases iOS 5.0.



    3) How masochistic are you to come to this forum just to get your ass handed to you with every post you make?
  • Reply 23 of 233
    pokepoke Posts: 506member
    Quote:
    Originally Posted by Xian Zhu Xuande View Post


    Amazon makes plenty of money on the content they sell, such as ebooks. They don't want to lose too much money on these tablets but they can afford to lose some. They can't complete head-to-head against the iPad, so they have to offer something compelling at a cheaper price point, perhaps trying to take the iPad on from a different angle down the road with a refreshed product.



    Just because it's a tablet does not mean it is a 'high-margin' product.



    No, they don't make plenty of money on content and, no, they can't afford to lose money on a tablet. They made $1 billion in profit last year on $34 billion in revenue. At $50 loss per tablet, 20 million tablets/year would be $1 billion in losses. If Amazon is smart they're looking at the Kindle as a way to be move up, not as a loss leader for the razor thin margins of online retail.
  • Reply 24 of 233
    Quote:
    Originally Posted by bettieblue View Post


    Maybe iCloud will be as good as.....



    https://www.amazon.com/clouddrive/le...320744-0217565



    Apple had better get "it's" iCloud right..............this time around.



    Good luck Apple



    iCloud is better. http://www.appleinsider.com/articles...nes_match.html



    Get a clue bettieblue.
  • Reply 25 of 233
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by King of Beige View Post


    This holiday season, many buyers will choose an iPad over the Kindle(s), etc. because they want the iOS,iTunes and App Store experiences. Those who don't, well, Amazon had better get "it's" android experience right else shoppers will be returning them in droves on the 26th and heading to the Apple store on the 27th.



    "The great race for 2nd place in the iPad space continues unabated at a furious pace with Apple as the reigning Ace. All other imitators should save face and exit the race with grace before the worst-case, your shareholders have you replaced for running said race and finishing last place."



    Good luck Amazon



    This Kindle tablet might be a longterm benefit for Apple. Popping down 40% the cost of the iPad might be a good way for consumers to get a feel for how a tablet could work into their usage needs, which could push them to invest into the $500+ iPad tablet with a much better app and media ecosystem, which also includes access to Kindle books and likely future access to Amazon's ecosystem since that is their main focus, not the HW.
  • Reply 26 of 233
    In other news BMW is going out of business because everyone is buying cheaper cars from General Motors. Oh no sorry it's the other way around



    There are plenty of cheap tablets out there already but they are all crap which is why nobody wants one.



    If they loose $50 per device and sell 10m of them thats a loss of $500m. Great business model!
  • Reply 27 of 233
    mr. hmr. h Posts: 4,870member
    Quote:
    Originally Posted by bettieblue View Post


    Hmm I just read today that is cost them $180 to make, so maybe my math is off but that is $19 per device they will make....not lose.



    It's your understanding rather than your maths that is off.



    What was reported earlier is that an analyst estimated the Fire's bill of materials to be $180. That doesn't mean it costs Amazon $180 to make a Fire, it means if you add up the cost of the components that go into a Fire, it comes to $180. So that $180 doesn't include assembly costs, shipping, support, cost of returns/failures, R&D or overheads. If the BOM really is $180, I'd say it's an optimistic guess that Amazon loses only $50 per sale at $199 retail price.
  • Reply 28 of 233
    Amazon like Apple will get a massive discount on parts so that $180 can come down to as low as $50.



    Only they know what the parts list is but there are better tablets out there selling for near the same, and without Amazon's mega purchase power.
  • Reply 29 of 233
    Quote:
    Originally Posted by bettieblue View Post


    Hmm I just read today that is cost them $180 to make, so maybe my math is off but that is $19 per device they will make....not lose.



    DED you are scared, I can smell your fear. The iPad finally has a real contender, backed a equally if not larger echo system.



    Sure the iPad is a technically better device but so is the Xoom compared to the iPad. The rell DIFFERENCE here is $300.



    Not a single user will care what OS it will run, provided it can do what they want. Every single app you can buy for it on Amazon will run on it, vs the other Andriod tablets and massive fragmentation/apps.



    It is like Amazon stole Andriod from Google and watched and learned from Apple. I Love IT!!!!



    My pre-order goes in today.



    $180 is just BOM probably and doesn't include R&D, licensing, packaging, delivery, among others. So Amazon probably is losing money off of it. But they do that all the time. That's their business model to lose money on one thing and make it up on another.
  • Reply 30 of 233
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by aBeliefSystem View Post


    Amazon like Apple will get a massive discount on parts so that $180 can come down to as low as $50.



    Only they know what the parts list is but there are better tablets out there selling for near the same, and without Amazon's mega purchase power.



    The only way they will get a large discount is if they can order tens of millions of them the way Apple does. Otherwise, they will pay ablutions the same as everyone else. Apple also gets massive discounts because they buy equipment for manufacturers as well as paying for the expansion of their plants to manufacturer parts and assemblies for Apple that gets discounted back to Apple once manufacture begins.



    There are no good tablets selling for anything close to what Amazon is going to charge.



    You also know nothing about manufacture if you think those numbers can come down to $50. If it were Apple, it could come down to maybe $140, and even that's really low.
  • Reply 31 of 233
    Quote:
    Originally Posted by bettieblue View Post


    Hmm I just read today that is cost them $180 to make, so maybe my math is off but that is $19 per device they will make....not lose.



    Stop your FUD. You were a full participant in a previous thread just a little earlier where these issues were thrashed out in depth.



    The $19 is gross margin, not profit.



    Under any remotely reasonable set set of assumptions, the profit is likely to be negative.
  • Reply 32 of 233
    Quote:
    Originally Posted by bettieblue View Post




    Sure the iPad is a technically better device but so is the Xoom compared to the iPad. The rell DIFFERENCE here is $300.






    Given that the iPad's ASP is over six bills, people could buy two of these and have more than $100 left over to buy content.
  • Reply 33 of 233
    Quote:
    Originally Posted by melgross View Post


    The only way they will get a large discount is if they can order tens of millions of them ....



    It is not obvious that Amazon has the capabilities (yet) for managing a supply and retail chain for hardware in the tens of millions. It took Apple decades of experience to get here in terms of such capabilities.



    Looks like Munster is belatedly recognizing the same point when he says "..."supply chain, production and distribution capabilities." The other analysts are not quite there yet....
  • Reply 34 of 233
    rainrain Posts: 538member
    Seems the Kindle Fire competes against the iPod Touch - and does it well for someone who wants a similar device with a larger screen- better for reading on.



    I don't see this competing with the iPad at all.

    I would have to play with one first thou before I make a judgement. Like SJ said about the first iPad; You have to hold one in your hand to understand it.
  • Reply 35 of 233
    Quote:
    Originally Posted by bettieblue View Post


    Hmm I just read today that is cost them $180 to make, so maybe my math is off but that is $19 per device they will make....not lose.



    DED you are scared, I can smell your fear. The iPad finally has a real contender, backed a equally if not larger echo system.



    Sure the iPad is a technically better device but so is the Xoom compared to the iPad. The rell DIFFERENCE here is $300.



    Not a single user will care what OS it will run, provided it can do what they want. Every single app you can buy for it on Amazon will run on it, vs the other Andriod tablets and massive fragmentation/apps.



    It is like Amazon stole Andriod from Google and watched and learned from Apple. I Love IT!!!!



    My pre-order goes in today.



    That's really cool that they don't have to package it, ship it, market it, etc. All free, apparently.



    Amazon can lose money up-front on the device and still make it up if they sell enough content, and they certainly have a chance at that. I've bought most of my ebooks for Kindle, not iBooks, given that iBooks doesn't let me read on my e-ink screen (uh, which this color Kindle doesn't have either...) and doesn't let me look at the books on my Mac.



    So Kindle has content advantages, but it doesn't appear to have anything going for it that would make it more of an iPad competitor than the Nook Color - which is presumably why B&N shares were down on the news. A 7" screen, slower CPU - other 7" tablets are taking the main hit there. Of course, given that you can get the Kindle reader app for the iPad, if you want to read on an LCD there's no advantage to the Fire other than up-front cost - certainly not apps, screen size, speed, etc.



    So please, go pre-order and get yourself all excited. You can of course get the same thing for a few $ more today over at B&N.
  • Reply 36 of 233
    Quote:
    Originally Posted by aBeliefSystem View Post


    Amazon like Apple will get a massive discount on parts so that $180 can come down to as low as $50.



    Only they know what the parts list is but there are better tablets out there selling for near the same, and without Amazon's mega purchase power.



    Maybe if Amazon is shopping for parts individually at Radio Shack, but you do realize that the margin on the parts for the component suppliers is unlikely to be 250% given that Amazon is already ordering relatively large numbers, right? Can we all assume you're just kidding?
  • Reply 37 of 233
    Quote:
    Originally Posted by bettieblue View Post


    Hmm I just read today that is cost them $180 to make, so maybe my math is off but that is $19 per device they will make....not lose.



    DED you are scared, I can smell your fear. The iPad finally has a real contender, backed a equally if not larger echo system.



    Sure the iPad is a technically better device but so is the Xoom compared to the iPad. The rell DIFFERENCE here is $300.



    Not a single user will care what OS it will run, provided it can do what they want. Every single app you can buy for it on Amazon will run on it, vs the other Andriod tablets and massive fragmentation/apps.



    It is like Amazon stole Andriod from Google and watched and learned from Apple. I Love IT!!!!



    My pre-order goes in today.



    Besides the fact that you are, apparently, on the wrong website's forum, and consequently are consistently wrong; would you please, PLEASE stop saying "echo system"? You did it in this thread, and in another thread several times. It's "ecosystem."



    "You keep using that word. I do not think it means, what you think it means." ~ Inigo Montoya
  • Reply 38 of 233
    macrulezmacrulez Posts: 2,455member
    deleted
  • Reply 39 of 233
    macrulezmacrulez Posts: 2,455member
    deleted
  • Reply 40 of 233
    jetzjetz Posts: 1,293member
    It worked for razor blades and worked for game console makers. It will work for Amazon.



    $50? That's like 5 e-books.



    And no they are not forking Android. They've just heavily skinned their version. The underlying OS is still the same. It'd be foolish to fork the OS and create more hassles for developers.



    It's a brilliant move on Amazon's part. They'll offer a curated app store and a media eco-system that's as good as what Apple's got (maybe even better in some respects....Amazon Prime for example). All without really having to spend time developing the OS (just work on their propreitary skin) on a tablet that's at impulse buy prices.



    If the Touchpad has taught us anything, it's that there is a price point at which people will buy a tablet other than the iPad. Amazon just launched a device at that price point. And they've made it eminently more functional and supportable than the Touchpad could ever be.
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