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Tuesday, 6 November 2012

Kindle Fire HD, Microsoft Surface teardowns reveal production costs for Amazon, Microsoft

Last year, IHS found that the original Kindle Fire cost Amazon around $187 to make and now they have taken on the new Kindle Fire HD to see exactly how much it Amazon pays to build one. The company redesigned the new Kindle Fire HD and IHS tore down the device to see exactly what’s inside. The results are quite interesting.
While it’s selling for only $199, IHS revealed that the components used to build this new device cost somewhere around $165. Unlike last year, LG Displays produced the new high resolution 720p display; Texas Instruments helped out with the power supply, video chips, and the new blazing fast dual-core processing chip; while Samsung, after Apple essentially stopped using them for many of their iPad/iPhone components, was able to get a deal with Amazon to supply the memory chip in the new Kindle Fire.
The end result of all these components coming together is a great tablet that many reviewers have recommended for parents and students alike. In today’s competitive market, Google and Amazon are going head to head with their tablets and, while the Nexus 7 seemingly has cheaper components, it seems safe to say that Google’s baby is outselling Amazon’s.
The same AllThingsD article mentions the Microsoft Surface’s component estimated value, as submitted by the same IHS. Unlike Google and Amazon, Microsoft is apparently not interested in creating a budget-friendly tablet, but rather, the company priced the Surface unnecessarily high to compete directly with Apple’s iPad.
IHS’ check of the Surface shows that the components that are being used to build the new tablet, when all put together, cost around $271. Now Microsoft could have easily priced their tablet at $300 or even $400 and still have had pretty good profit margins from it while, simultaneously, boosting the user base of the newly released Windows 8 OS — obviously that is not the goal.
The research firm also found that the new Microsoft Touch Cover, priced separately at $120, costs Microsoft around $16 to produce, and so they will undoubtedly enjoy the extra profit. This goes to show how much more customer-oriented the Nexus 7 and Kindle Fire HD are in comparison to the Microsoft Surface that seems mostly profit-oriented.
Now the question comes in, which of these tablets are you going to purchase this holiday season?



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