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    Amazon's $199 Kindle Fire Costs $209.63 to Make [STUDY]

    By Todd Wasserman | Mashable – Fri, Sep 30, 2011

    Amazon's new Kindle Fire costs $209.63 to make, meaning the company loses about $10 on each one it sells, a new study reveals.

    Research firm IHS offers a rundown of the device's components on its site. Materials for the Kindle Fire, which retails for $199, cost $191.65, but with factory expenses, that comes to $209.63. However, despite the apparent loss, IHS estimates that Amazon is "likely to generate a marginal profit of $10" on each Kindle Fire sold, when you take into account sales of digital content with the device.

    [More from Mashable: Amazon Looking to Buy Palm [REPORT]]

    The researcher goes on to reason that Amazon doesn't make a lot of money from Kindle sales or sales of digital content like ebooks and music. Instead, Amazon's strategy is to lure more customers to buy higher-margin goods from its site. "So far, no retailer has managed to create an umbilical link between digital content and a more conventional retail environment," "says the announcement from IHS. "With Kindle, Amazon has created the most convincing attempt at this yet, and it is doing so by using established retail tactics: deploying content to get shoppers in the door, and then selling them all sorts of other goods."

    SEE ALSO: Amazon Kindle Fire Just Hijacked Android

    [More from Mashable: WATCH: Jeff Bezos Introduces Amazon’s Kindle Fire [VIDEO]]

    Kindle Fire, introduced this week, is selling at a price that's lower than some had predicted. It's also $50 less than Barnes & Noble's Nook Color, its closest competitor.

    This story originally published on Mashable here.

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