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Amazon Kindle Productions Cost Half Its Price

April 22, 2009

Research group iSuppli Corp said on Wednesday, that Amazon’s Kindle 2 electronic reader retails for $359, but costs about half that amount to build.

ISuppli found that the direct materials used in the Kindle cost $176.83 during a dissection of the much talked-about device, whose profitability and sales Amazon has never disclosed.

The group found that once the cost of manufacturing and battery was added up, the total was then $185.49.

That sum does not include intellectual property costs, royalties and licensing fees and costs from software development, shipping and marketing.

Amazon was not immediately available for comment.

The world’s largest online retailer launched the second version of its Kindle in February, which allows users to read books, newspapers and blogs wirelessly on a device weighing less than a paperback book.

Although the retail price did not change, the new digital book reader includes more storage and a slimmer silhouette than the original version.

ISuppli performed a “virtual teardown” of the product, using insights from its staff to develop estimates of the Kindle’s content and cost structure.

The company also said that the most expensive component of the Kindle is its display module from E Ink Corp, followed by its wireless broadband module from Novatel Wireless Inc.

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