(Image Source: Amazon) 

BY ADAM FALK

ANCHOR EMILY SPAIN

You're watching multisource tech video news analysis from Newsy.
 

As talk of the Kindle Fire being an iPad killer heats up, a research study shows Amazon might need to make sure its not burning down it’s own house.

iSuppli Research released an analysis saying the $199 Kindle tablet costs the company $209.63 to manufacture. And factoring in other costs, the Fire could burn the online retailer $50 per device. The International Business Times says... (Video: Amazon)

“However, common logic dictates that no company can really sell products at a loss. Therefore, the retailer must have a different strategy when it comes to pocketing the big bucks.”

eWeek reports, as a matter of fact, they do. A research note accompanying the analysis says the benefit isn’t form the hardware, but from the demand. If you’re on Amazon for the Fire, chances are you might check out with more.

“That strategy could pay off for Amazon in the long run.”
And the note added...
“So far, no retailer has managed to create an umbilical link between digital content and a more conventional retail environment.”

And a writer on Examiner supports the strategy saying...

“Whoever thought up the marketing strategy for the Amazon tablet probably should be given a promotion. But if that someone is Amazon CEO Jeff Bezos, his reward has already been paid with the knowledge that his Kindle Fire is just that, on fire.”

But The Wall Street Journal reminds readers, these estimates are early. Another specialist in the field, UBM TechInsights, put the tablet’s tab at $150.

“Why the early differences? UBM figures the Fire’s touch screen and display is costing Amazon $60, while IHS iSuppli estimates the cost at $87. IHS iSuppli added a $11 cost for the Fire’s plastic enclosure, while UBM didn’t break that factor out.”

So, can Kindle really burn the iPad if it’s a loss leader? For comparison sake, ForexTV reports the $499 Apple device costs $350 to produce.



Transcript by Newsy.