

The True Cost of Amazon's New Kindle  - mjfern
http://www.businessweek.com/technology/content/apr2009/tc20090421_430707.htm

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timdorr
Great. Another iSuppli teardown that's going to cause everyone on the Internet
to cry foul at how Amazon is charging 48% mark up on it's devices. Yes,
because these things build themselves, weren't designed by anyone, get shipped
through instantaneous teleportation, market themselves, and do their own
support...

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michael_dorfman
50% mark-up is pretty standard for retail items. I'm surprised the Kindle
mark-up is not higher.

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silentOpen
It's not 50% mark-up, it's 93% mark-up: $185.49 to $359.00

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MrRage
That depends on how you read the phrase "50% mark-up". I read it as 50% of the
retail price is mark-up, the other 50% is cost.

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silentOpen
<http://en.wikipedia.org/wiki/Markup_(business)> is generally accepted.

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harpastum
John Gruber wrote a great commentary on iSuppli's methods a while ago [1].
Basically, his assertion is that their numbers are a mix of generalizations
and pure imagination, and don't take into account a lot of important factors.

[1]<http://daringfireball.net/2007/07/isuppli>

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tedshroyer
I think you get free wireless for the entire lifetime of the device. Some of
the cost must go toward that.

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kqr2
I believe that's also subsidized by the cost of the ebooks which they hope you
will purchase.

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saturdayplace
Who _cares_ how much it costs Amazon to make the thing? You don't like the
price, you don't buy it. What do Amazon's costs have to do with that decision?

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sgrove
I'm not sure why you phrase it so discouragingly. What's wrong with wanting to
know simply for curiosity's sake? I'm interested in buying a kindle. I'd be
interested in buying it without knowing individual component costs. But if
offered the chance to see the prices, I'd be interested, sure.

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saturdayplace
My phrasing was because of the markup discussion above. I'd assumed people
were talking about the high _(?)_ markup because it'd factor into their buying
decision, which seems pointless.

I see nothing wrong with wanting to know for curiosity's sake.

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gcheong
As a consumer, I'm more interested in cost of ownership of the device in
comparison with just buying physical books rather than the underlying
manufacturing cost.

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rw
The books you buy for the Kindle _are_ physical books, i.e. they are made of
electrons.

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showerst
Here's their actual detailed breakdown for the curious:
<http://www.isuppli.com/NewsDetail.aspx?ID=20138>

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joshu
I find it odd that they would call out ARM licensing fees. Wouldn't that be
included in the cost of the part?

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ableal
The research guys, iSuppli, rightly did not include them - they're usually
paid by the chip vendor to ARM (or whatever licensor), and included in the
chip price. The writer tried to be clever, and missed.

Retail price = 3 x BOM (bill-of-materials) is one rule-of-thumb for volume
hardware without special assembly or extraordinary software.

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joshu
(so to nitpick, iSuppli rightly DID include them? -- in the cost of the chip)

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ableal
Well, iSuppli did not mention them. The writer brought it up: "Royalty
Payments Not Addressed ... One cost iSuppli's teardowns don't address: Any
royalties paid to ARM."

He missed the mark - he might have had a point for data formats. I think that
licensing costs are borne by the manufacturers (of the final product) for
firmware they toss in to decode DVDs, MP3s, etc. Cf. recent TomTom/Microsoft
FAT kerfuffle.

