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.
No. You really have to understand business and economics. It isn't the sale price that matters here, it's the profit off those sales that will pay for this. Last year, Amazon squeaked a very small 3.37% profit off all of their sales. Assuming that average, they made $50 profit on about $1,484 in sales. So they would have to sell that much to just break even on the loss from the tablet. But that would mean that they made no profit on $1,684 in sales. That would be the price of the tablet, plus the sales to erase the loss from the sale.
That's a pretty bad business model. Only Amazon knows how much, on average, its customers buy each year, but this would have to come from sales through the tablet that they hadn't gotten otherwise, or the sale of the tablet would have done nothing to increase their business. I buy a lot of books from Amazon to read on my Kindle app. If instead, I bought the Fire, and bought my books there, even though I buy at least a dozen from them every month, they would be losing money on me, because I was buying those books anyway, and they know it's for the Kindle app on my iPad.
There's a good chance it'll arrive too late to regain that segment by that time.
It's not highly likely. There's no evidence that consumers are buying 7" tablets. If they buy this in fair numbers, as may happen, it's not taking much from Apple's market for a real tablet, which this is not. This competes with the B&N Nookcolor. It will beat that out, as Amazon has more content than B&N. But it doesn't directly compete with Apple.
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..
Wrong. $180 is component cost - not total cost.
Quote:
Originally Posted by anantksundaram
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.
That's not correct, either. Gross margin is selling price minus direct costs.
Direct costs include manufacturing assembly costs, materials, scrap, manufacturing overhead, packaging, and usually shipping. Depending on the way a company accounts for things, it may also include distributor discounts, rebates, etc.
If the selling price is $199 and bill of materials is $180, then the gross margin is undoubtedly negative.
Quote:
Originally Posted by Jetz
It worked for razor blades and worked for game console makers. It will work for Amazon.
$50? That's like 5 e-books.
Nope. If an average eBook is $9.99 and Amazon keeps 30%, then they have $3.00 in contribution margin for each eBook sold - so they need to sell about 17 to make up for a $50 loss.
Quote:
Originally Posted by aBeliefSystem
Amazon like Apple will get a massive discount on parts so that $180 can come down to as low as $50.
Nonsense. It's crazy to think that Amazon is getting the parts for 70% less than the prices used in the BOM (which were already quantity prices). Even Apple isn't buying components for 70% below wholesale.
You underestimate how good a product this Kindle Fire is. Once you buy it and then sign up for Amazon Prime, you're hooked. It'd be like Netflix, only cheaper and you can only use all the services with the Kindle Fire. The iPad will be a poor substitute because the switch cost of losing some of the Prime services using just the iPad would be big enough that customers won't want to switch.
Do you know that United States is not the only country on the earth? For me, Kindle Fire FAILED!
From Amazon website: "Instant video is available only to Amazon Prime members located in the continental United States, Alaska, and Hawaii."
R&D is a fixed cost (and likely reduced since it leverages the Playbook hardware design and Android software), licensing and packaging are unknown but probably minimal, and distribution is also likely minimal (since logistics is one of Amazon's key strengths).
I find it strange that an analyst doesn't release supporting data, but "$50 per Kindle Fire" is grossly oversimplified and is likely not true after a certain number of devices.
It's unlikely that Amazon would run themselves broke selling the Fire for $199, when a $249 price tag would match the Nook Color for a better device with much better services.
R&D is a fixed cost, yes, but it must be apportioned to the number of devices sold. The fewer sold, the more the R&D cost hangs over. You have no idea if this has anything to do with the Playbook, even though there is a rumor about it. The Playbook is a design owned by RIM. I doubt it would allow its manufacturer to use the design as a basis for a competing company. It looks somewhat like a Playbook as the Samsung Tabs look like an iPad. That doesn't mean that the Tab is an iPad in disguise.
Manufacturing costs will be what they are, and it's likely that it is around $180 per. But whether you like it or not, packaging costs are at least a couple of bucks per. It still costs to ship them from China to N. america and elsewhere. Then there are advertising expenses, sales expenses, support and warrantee service that must be added in. And then there is the rest of what we know as operating margins. That means the cost of the people working at Amazon, the price of lighting in the offices and warehouses, insurance, taxes, and of course, paperclips. In other words, the product must share a certain percentage of keeping the company operating.
Only after all of that is accounted for do we get an after taxes net margin, otherwise known as profit. It's easy to understand why they could be losing $50 on each sale.
Munster is just throwing out a figure whose only basis is the three seconds he gave himself to write it down. And AI is quoting it as a real figure, but it's not. Not only is it a total guess on his part, but he doesn't give any reason why it wouldn't be $100 or $1. It's a blogtalk byte, worse than info from a forum.
From the description of what this tablet has, and the knowledge that we all have of the cost of the parts, as they have been enumerated a number of times on iFixit and elsewhere, it isn't that difficult to get a good idea as to how much those parts cost. You can even go to the manufacturers of those parts an look up how much they charge for different numbers of them. The rest of the part costs can be estimated. This isn't done in a vacuum.
R&D is a fixed cost, yes, but it must be apportioned to the number of devices sold. The fewer sold, the more the R&D cost hangs over. You have no idea if this has anything to do with the Playbook, even though there is a rumor about it. The Playbook is a design owned by RIM. I doubt it would allow its manufacturer to use the design as a basis for a competing company. It looks somewhat like a Playbook as the Samsung Tabs look like an iPad. That doesn't mean that the Tab is an iPad in disguise.
Manufacturing costs will be what they are, and it's likely that it is around $180 per. But whether you like it or not, packaging costs are at least a couple of bucks per. It still costs to ship them from China to N. america and elsewhere. Then there are advertising expenses, sales expenses, support and warrantee service that must be added in. And then there is the rest of what we know as operating margins. That means the cost of the people working at Amazon, the price of lighting in the offices and warehouses, insurance, taxes, and of course, paperclips. In other words, the product must share a certain percentage of keeping the company operating.
Only after all of that is accounted for do we get an after taxes net margin, otherwise known as profit. It's easy to understand why they could be losing $50 on each sale.
Actually no, it's not easy to understand, because you're assuming the cost will be $180 per device. At the beginning, maybe, but the cost will keep decreasing after the initial batch. Basically it's like Xbox/Wii etc, at the beginning they even lose money, but after a while they'd start making money even though they cut prices.
Munster is just throwing out a figure whose only basis is the three seconds he gave himself to write it down. And AI is quoting it as a real figure, but it's not. Not only is it a total guess on his part, but he doesn't give any reason why it wouldn't be $100 or $1. It's a blogtalk byte, worse than info from a forum.
Nobody quoted this as a real figure... the word "estimates" is in the title.
I'd imagine that Amazon also did some estimating when they decided to produce the Fire. I wonder if that could be considered guessing.
Why would anyone buy an entire phone dataplan contract when all they wanted was a bigger iPod? The only reason people are crowing about how unwanted a 7" tablet is is because no one has yet put out a decent one. I'd love a good 7" $200 tablet. It would be awesome for me. Not that I have much interest in a forked closed dead end old version of Android, but that just means the Fire won't be it for me.
It may be impossible for anyone to come out with a really good 7" tablet for close to $300 and hope to make a decent profit on it. At least for a couple more years, that will be a fact of life. Anything that approaches this price will be junk. This tablet is decent, from a hardware perspective, but it lacks everything that would make it competitive as a stand alone tablet.
No cameras. No microphone. Only 8GB flash, and no way to add more, No gyroscope, no touch screen, just a primitive infra-red method, etc.
Add all of that to this, and it's going to be $75-100 more, and that's still losing money. Add another $75 to cancel out the loss and make a very small profit, and you're already up to at least $350. Of course, if you then have to give some profit to retailers, you've got to add at least another $75 to allow for a small discount. Now, you're up to $425.
The Fire is not a tablet, it is a content delivery device, with Amazon supplying all the content.
Also, pay attention to the bit about EC2 doing all the web browser rendering. Amazon now gets to collect demographic information about what web pages the owner surfs, and can then resell that information to various parties. Plus it can tell what ebay pages you look at, and match those to similar products on amazon.com.
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.
It really grates on me that iPad/iPhone gets tagged as having a "closed ecosystem," when they're the only devices on the market that will run your iTunes, iBooks, Nook and Kindle content.
As I understand it, piper jaffray is one if those analysts who cops it in the neck on this forum when it comes to anything Apple. Why is his word gospel now?
If the article here at AI from a few days ago is generally accurate, and the new Kindle Fire is basicly RIM's Playbook with a slower processor, less memory and no camera, the estimated parts bill (who's estimate again?) of $180 may not be accurate.
Back in April, iFixit and TechInsights had teardowns, parts ID's and estimated costs for a few devices, including the Playbook. At that time the total parts cost for the 16GB version was $190. Unless parts prices have gone up quite a bit since April, if Amazon's 8GB, no camera, no multi-touch display and older processor Playbook-ish version should be quite a bit less than that, correct? No camera saves $15, about $8 savings on 8GB rather than 16, plus savings on both the touchscreen and processor (Playbook's item cost was $45 and $17). Would $12 total probably be a fair savings on those two components? If so that's at least $33 less, dropping the parts costs to somewhere around $155 rather than $180, and that's ignoring the minor savings from eliminating bluetooth/radio/gps components.
So assuming AI and it's sources were right, a big assumption perhaps, the cost numbers that some of these analysts are using may be much higher than the reality.
Nobody quoted this as a real figure... the word "estimates" is in the title.
True, so let me clarify that this is being headlined as an estimate based on facts when it's just a pundit blowing a figure out his butt to get PJ some net time. Better they should call it a "wild guess".
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.
Go look at the blackberry playbook to get a idea of how crappy surfing the web on a 7inch screen is. and since its not honeycomb the apps will just be full screen apps designed for a phone, nothing special. is is not going to be a real competitor i cant see a doctor or a pilot or even a student carrying this about as its mostly a gimmick for reading books and surfing on a tiny screen
From the description of what this tablet has, and the knowledge that we all have of the cost of the parts, as they have been enumerated a number of times on iFixit and elsewhere, it isn't that difficult to get a good idea as to how much those parts cost. You can even go to the manufacturers of those parts an look up how much they charge for different numbers of them. The rest of the part costs can be estimated. This isn't done in a vacuum.
I'm not saying educated guesses can't be made. I am saying that Munster isn't showing any more insight into it than forum posters. By this I mean that there are often very astute arguments for things such as cost estimates posted in places like this forum, but I would hope that so much space devoted to a mouthpiece from PJ would have meatier content by 300%. He comes off like a 3rd tier forum poster, not an expert.
bravo. so i mixed up munster and his firm's name. Thanks for pointing that out big guy.
Care to address the original point? These numbers are guesses, just like any other analysts prediction, but for some reason they're given significantly extra weight on this forum today. Why is that?
Someone guesses the the BOM to be $180. Then some 'analyst' tacks another $70 bucks on, then says he guesses Amazon is pulling a loss on each unit? Guesses on Guesses.
It worked for razor blades and worked for game console makers. It will work for Amazon.
$50? That's like 5 e-books.
It works for razor blades and games because they're both sold at a huge mark-up. Ebooks and music are not. Nobody is making money in ebooks and music. Furthermore, consoles have a long lifespan - the XBox 360 is 6 years old - whereas these tablets are getting updated at least every year. No doubt there'll be a new Kindle Fire next year and they'll have to raise the specs and continue to lose money to meet the price point (if they're losing money now).
Comments
I thought Ms. Blue was being rather clever there in her portrayal of the the world of Apple.
You would, but then again...
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.
No. You really have to understand business and economics. It isn't the sale price that matters here, it's the profit off those sales that will pay for this. Last year, Amazon squeaked a very small 3.37% profit off all of their sales. Assuming that average, they made $50 profit on about $1,484 in sales. So they would have to sell that much to just break even on the loss from the tablet. But that would mean that they made no profit on $1,684 in sales. That would be the price of the tablet, plus the sales to erase the loss from the sale.
That's a pretty bad business model. Only Amazon knows how much, on average, its customers buy each year, but this would have to come from sales through the tablet that they hadn't gotten otherwise, or the sale of the tablet would have done nothing to increase their business. I buy a lot of books from Amazon to read on my Kindle app. If instead, I bought the Fire, and bought my books there, even though I buy at least a dozen from them every month, they would be losing money on me, because I was buying those books anyway, and they know it's for the Kindle app on my iPad.
Highly likely.
There's a good chance it'll arrive too late to regain that segment by that time.
It's not highly likely. There's no evidence that consumers are buying 7" tablets. If they buy this in fair numbers, as may happen, it's not taking much from Apple's market for a real tablet, which this is not. This competes with the B&N Nookcolor. It will beat that out, as Amazon has more content than B&N. But it doesn't directly compete with Apple.
A little perspective on form factors and capabilities relative to demand:
http://pewinternet.org/Reports/2011/...ts/Report.aspx
That has nothing to do with Apple' sales of the iPad.
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..
Wrong. $180 is component cost - not total cost.
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.
That's not correct, either. Gross margin is selling price minus direct costs.
Direct costs include manufacturing assembly costs, materials, scrap, manufacturing overhead, packaging, and usually shipping. Depending on the way a company accounts for things, it may also include distributor discounts, rebates, etc.
If the selling price is $199 and bill of materials is $180, then the gross margin is undoubtedly negative.
It worked for razor blades and worked for game console makers. It will work for Amazon.
$50? That's like 5 e-books.
Nope. If an average eBook is $9.99 and Amazon keeps 30%, then they have $3.00 in contribution margin for each eBook sold - so they need to sell about 17 to make up for a $50 loss.
Amazon like Apple will get a massive discount on parts so that $180 can come down to as low as $50.
Nonsense. It's crazy to think that Amazon is getting the parts for 70% less than the prices used in the BOM (which were already quantity prices). Even Apple isn't buying components for 70% below wholesale.
You underestimate how good a product this Kindle Fire is. Once you buy it and then sign up for Amazon Prime, you're hooked. It'd be like Netflix, only cheaper and you can only use all the services with the Kindle Fire. The iPad will be a poor substitute because the switch cost of losing some of the Prime services using just the iPad would be big enough that customers won't want to switch.
Do you know that United States is not the only country on the earth? For me, Kindle Fire FAILED!
From Amazon website: "Instant video is available only to Amazon Prime members located in the continental United States, Alaska, and Hawaii."
R&D is a fixed cost (and likely reduced since it leverages the Playbook hardware design and Android software), licensing and packaging are unknown but probably minimal, and distribution is also likely minimal (since logistics is one of Amazon's key strengths).
I find it strange that an analyst doesn't release supporting data, but "$50 per Kindle Fire" is grossly oversimplified and is likely not true after a certain number of devices.
It's unlikely that Amazon would run themselves broke selling the Fire for $199, when a $249 price tag would match the Nook Color for a better device with much better services.
R&D is a fixed cost, yes, but it must be apportioned to the number of devices sold. The fewer sold, the more the R&D cost hangs over. You have no idea if this has anything to do with the Playbook, even though there is a rumor about it. The Playbook is a design owned by RIM. I doubt it would allow its manufacturer to use the design as a basis for a competing company. It looks somewhat like a Playbook as the Samsung Tabs look like an iPad. That doesn't mean that the Tab is an iPad in disguise.
Manufacturing costs will be what they are, and it's likely that it is around $180 per. But whether you like it or not, packaging costs are at least a couple of bucks per. It still costs to ship them from China to N. america and elsewhere. Then there are advertising expenses, sales expenses, support and warrantee service that must be added in. And then there is the rest of what we know as operating margins. That means the cost of the people working at Amazon, the price of lighting in the offices and warehouses, insurance, taxes, and of course, paperclips. In other words, the product must share a certain percentage of keeping the company operating.
Only after all of that is accounted for do we get an after taxes net margin, otherwise known as profit. It's easy to understand why they could be losing $50 on each sale.
Munster is just throwing out a figure whose only basis is the three seconds he gave himself to write it down. And AI is quoting it as a real figure, but it's not. Not only is it a total guess on his part, but he doesn't give any reason why it wouldn't be $100 or $1. It's a blogtalk byte, worse than info from a forum.
From the description of what this tablet has, and the knowledge that we all have of the cost of the parts, as they have been enumerated a number of times on iFixit and elsewhere, it isn't that difficult to get a good idea as to how much those parts cost. You can even go to the manufacturers of those parts an look up how much they charge for different numbers of them. The rest of the part costs can be estimated. This isn't done in a vacuum.
R&D is a fixed cost, yes, but it must be apportioned to the number of devices sold. The fewer sold, the more the R&D cost hangs over. You have no idea if this has anything to do with the Playbook, even though there is a rumor about it. The Playbook is a design owned by RIM. I doubt it would allow its manufacturer to use the design as a basis for a competing company. It looks somewhat like a Playbook as the Samsung Tabs look like an iPad. That doesn't mean that the Tab is an iPad in disguise.
Manufacturing costs will be what they are, and it's likely that it is around $180 per. But whether you like it or not, packaging costs are at least a couple of bucks per. It still costs to ship them from China to N. america and elsewhere. Then there are advertising expenses, sales expenses, support and warrantee service that must be added in. And then there is the rest of what we know as operating margins. That means the cost of the people working at Amazon, the price of lighting in the offices and warehouses, insurance, taxes, and of course, paperclips. In other words, the product must share a certain percentage of keeping the company operating.
Only after all of that is accounted for do we get an after taxes net margin, otherwise known as profit. It's easy to understand why they could be losing $50 on each sale.
Actually no, it's not easy to understand, because you're assuming the cost will be $180 per device. At the beginning, maybe, but the cost will keep decreasing after the initial batch. Basically it's like Xbox/Wii etc, at the beginning they even lose money, but after a while they'd start making money even though they cut prices.
Munster is just throwing out a figure whose only basis is the three seconds he gave himself to write it down. And AI is quoting it as a real figure, but it's not. Not only is it a total guess on his part, but he doesn't give any reason why it wouldn't be $100 or $1. It's a blogtalk byte, worse than info from a forum.
Nobody quoted this as a real figure... the word "estimates" is in the title.
I'd imagine that Amazon also did some estimating when they decided to produce the Fire. I wonder if that could be considered guessing.
What's your guess?
Why would anyone buy an entire phone dataplan contract when all they wanted was a bigger iPod? The only reason people are crowing about how unwanted a 7" tablet is is because no one has yet put out a decent one. I'd love a good 7" $200 tablet. It would be awesome for me. Not that I have much interest in a forked closed dead end old version of Android, but that just means the Fire won't be it for me.
It may be impossible for anyone to come out with a really good 7" tablet for close to $300 and hope to make a decent profit on it. At least for a couple more years, that will be a fact of life. Anything that approaches this price will be junk. This tablet is decent, from a hardware perspective, but it lacks everything that would make it competitive as a stand alone tablet.
No cameras. No microphone. Only 8GB flash, and no way to add more, No gyroscope, no touch screen, just a primitive infra-red method, etc.
Add all of that to this, and it's going to be $75-100 more, and that's still losing money. Add another $75 to cancel out the loss and make a very small profit, and you're already up to at least $350. Of course, if you then have to give some profit to retailers, you've got to add at least another $75 to allow for a small discount. Now, you're up to $425.
We can see why this isn't easy.
Also, pay attention to the bit about EC2 doing all the web browser rendering. Amazon now gets to collect demographic information about what web pages the owner surfs, and can then resell that information to various parties. Plus it can tell what ebay pages you look at, and match those to similar products on amazon.com.
Follow the money trail !
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.
It really grates on me that iPad/iPhone gets tagged as having a "closed ecosystem," when they're the only devices on the market that will run your iTunes, iBooks, Nook and Kindle content.
As I understand it, piper jaffray is one if those analysts who cops it in the neck on this forum when it comes to anything Apple. Why is his word gospel now?
Piper Jaffray is a COMPANY, not a MAN.
Jesus H. Christ.
Back in April, iFixit and TechInsights had teardowns, parts ID's and estimated costs for a few devices, including the Playbook. At that time the total parts cost for the 16GB version was $190. Unless parts prices have gone up quite a bit since April, if Amazon's 8GB, no camera, no multi-touch display and older processor Playbook-ish version should be quite a bit less than that, correct? No camera saves $15, about $8 savings on 8GB rather than 16, plus savings on both the touchscreen and processor (Playbook's item cost was $45 and $17). Would $12 total probably be a fair savings on those two components? If so that's at least $33 less, dropping the parts costs to somewhere around $155 rather than $180, and that's ignoring the minor savings from eliminating bluetooth/radio/gps components.
So assuming AI and it's sources were right, a big assumption perhaps, the cost numbers that some of these analysts are using may be much higher than the reality.
http://www.ubmtechinsights.com/uploa...ison_chart.JPG
http://www.redblackberry.com/blackbe...and-chipworks/
Nobody quoted this as a real figure... the word "estimates" is in the title.
True, so let me clarify that this is being headlined as an estimate based on facts when it's just a pundit blowing a figure out his butt to get PJ some net time. Better they should call it a "wild guess".
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.
Go look at the blackberry playbook to get a idea of how crappy surfing the web on a 7inch screen is. and since its not honeycomb the apps will just be full screen apps designed for a phone, nothing special. is is not going to be a real competitor i cant see a doctor or a pilot or even a student carrying this about as its mostly a gimmick for reading books and surfing on a tiny screen
From the description of what this tablet has, and the knowledge that we all have of the cost of the parts, as they have been enumerated a number of times on iFixit and elsewhere, it isn't that difficult to get a good idea as to how much those parts cost. You can even go to the manufacturers of those parts an look up how much they charge for different numbers of them. The rest of the part costs can be estimated. This isn't done in a vacuum.
I'm not saying educated guesses can't be made. I am saying that Munster isn't showing any more insight into it than forum posters. By this I mean that there are often very astute arguments for things such as cost estimates posted in places like this forum, but I would hope that so much space devoted to a mouthpiece from PJ would have meatier content by 300%. He comes off like a 3rd tier forum poster, not an expert.
Piper Jaffray is a COMPANY, not a MAN.
Jesus H. Christ.
bravo. so i mixed up munster and his firm's name. Thanks for pointing that out big guy.
Care to address the original point? These numbers are guesses, just like any other analysts prediction, but for some reason they're given significantly extra weight on this forum today. Why is that?
Someone guesses the the BOM to be $180. Then some 'analyst' tacks another $70 bucks on, then says he guesses Amazon is pulling a loss on each unit? Guesses on Guesses.
It worked for razor blades and worked for game console makers. It will work for Amazon.
$50? That's like 5 e-books.
It works for razor blades and games because they're both sold at a huge mark-up. Ebooks and music are not. Nobody is making money in ebooks and music. Furthermore, consoles have a long lifespan - the XBox 360 is 6 years old - whereas these tablets are getting updated at least every year. No doubt there'll be a new Kindle Fire next year and they'll have to raise the specs and continue to lose money to meet the price point (if they're losing money now).