Is It Amazon’s Conspiracy To Sell Kindle Fire At Break-Even Or Even In Loss?

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There has always been a question in my mind that whether Amazon is selling Kindle Fire at the rationale price or not? Kindle Fire has created an intense competition in the market since its advent in Q4 (calendar) last year. Most of analyst has revealed that the Tablet manufacturer is  selling the device at minimal price in order to squash iPad market share. Last year, marketers were even considering that the manufacturer came in the market to create an unfair competition. Are these rumors trust-worthy? Is Amazon really selling the device lower than its actual hardware cost?  If the company is doing so, then what is its benefit? There are lots of similar questions which poke into everyone’s mind, and they are really eager to know the answers of these questions. First, I have endeavored to know what is the actual price of the all the hardware components involve in the Kindle Fire.

Clearly, from the above chart, after aggregating the cost of all these components, the device expenses $209.63. It’s clear that Amazon is selling the device almost $10 lower than its actual cost. However, some marketers are saying that the company is using cheap hardware components which cost lesser or almost $199. Then, there is still a question that why Amazon is selling the device just on the actual (estimated by marketers) or less than the actual (as per estimated price in the chart)?

Is Amazon Targeting To Set iPad Off From The Growth

Amazon is not selling Kindle Fire just to get a benefit from its hardware component or integrated digital media contents such as books and Music, which are being provided by the device manufacturer . The company is emphasizing to stimulate sales of  physical goods–which is the foundation of the company. Really, the online retail giant generates its profit from sales of shoes and other types of physical products as Walmart and others retailers are generating offline. Amazon has created the device in order to attract a large numbers of people towards its money making items.

Amazon has tried to make a co-ordination between its digital content and more conventional retails environment. It has indirectly built a very impressive convincing ecosystem by deploying the contents to shoppers’ door. These shoppers are ultimately lured by the retail giant and then selling all sorts of good to them.

Undoubtedly, it’s the unique endeavor of  Amazon and really no other Tablet manufacturer or e-book readers are operating such a broad retail service so far.

Astoundingly, everyone is just comparing Kindle Fire with iPad 2, or even iPad 3, in respect of user experiences or hardware specifications. It’s pretty clear that Amazon’s Kindle Fire has clinched majority of iPad market share worldwide. And it’s true, Amazon sold 6 million Kindle Fire Tablets in the Q4 last year. But the dent is not only for Apple; Google Android is facing equal heat from the growth of Amazon Kindle Fire market as it has grabbed over half of the Android market share worldwide.

However, It’s not fair to compare Kindle Fire with iPad 2 which some analysts always use to do. In this aspect, my perception is somewhat different, because Amazon is not focusing to create a quality product and brand like Apple. However, comparisons between Kindle Fire and iPad 2 have been provided for you to clearly understand all sorts of specifications.

It’s quite clear from above chart that Apple’s iPad 2 is venerable than Amazon’s Kindle Fire. Despite of all these, Kindle Fire has become one of the demanded Tablets across the world, and a large numbers of users are still willing to buy the Tablet this year.

One thing is apparently clear that Kindle Fire has suppressed other Tablet manufacturers to lower down the price of their device. In March of this year, Apple also slashed down the price of its iPad 2 to $399 in order to contend Kindle Fire, besides, the success of ‘the 7-inch Tablet’ has also compelled the company to work on its iPad Mini project.

After subtle investigation, I am seeing that Amazon is winning in every aspect. The company has not yet targeted its hardware sections, but, it has craved an intense competition in the market –even genuine manufactures are also being threatened by the online retail giant. Google has also  planned to launch its own Android Tablet  for $149 this year and number of players like Samsung, RIM, Barnes & Noble and more have also lowered the price of their Tablet.

Despite of this, users are more relying on Amazon for e-books reading and integrated services. If you think calmly, you might find that Amazon has set up a long term goal, and indeed, it will jeopardize the future for all giants whether they belong to online retail segment or Tablet manufacturing or digital media contents or something else. Kindle Fire are continuously making its penetration in the market and the time will come when its hardware will also worth for the company.

Image credit: iSuppli, Techspere



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