http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/ Engadget Comments for iSuppli: $359 Kindle 2 costs $185 to build, Whispernet says shhh http://www.engadget.com/media/feedlogo.gif http://www.engadget.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 8:49AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:06AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:14AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Different companies will have different cost structures - some will pay more for components, others will pay more (relatively) for R and D, and some will pay more for software engineers.

So you cannot really say, components 50% of final price, OK; but components 25% of final price, not OK ... because it is feasible that Apple is paying much more than Amazon for software engineers, or R and D. Both of those other things also speak to how good a device is (like quality of components do) and add value.

Basically, you cannot judge a company's profit from a device by subtracting the component costs from the final price (because this ignores all the other costs involved with developing a product), so I think it is unfair to suggest that Apple is ripping people off, based only on an assessment of component costs.]]>Apr 22nd 2009 9:50PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 8:49AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Save your money kids and read a real book or go to alt.binaries.e-books...shhhhhh. :)]]>Apr 22nd 2009 9:35AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Just sayin']]>Apr 22nd 2009 12:24PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 12:32PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 8:49AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
I for one enjoy these articles, and think that it's okay to show the cost of the components.]]>Apr 22nd 2009 9:41AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Of course, Amazon has R&D costs and others that aren't just components. Same for Apple and others.

If you think the price is too high, don't buy.]]>Apr 22nd 2009 10:51AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 8:56AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 8:56AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:34AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
"The estimate does not include the costs related to marketing, distribution, class-actions, or the pain you feel at having learned the true definition of free."

Or the cost of R&D.

Personally, it's too expensive for me to even consider it. Not to mention the benefits aren't really there for me either. Now if my textbooks where on there, and it was color then sign me up!

And thats just what else Amazon has to factor into the price. Not everyone is going to buy one, so to actually make meaningful profit the margin is inflated to overcome low production of a somewhat expensive item. When you add all those things into, I'm honestly surprised it isn't $500.

Where on the other hand you have Apple/Nintendo products that are high demand, high production items with similar levels of mark-up.

]]>Apr 22nd 2009 8:58AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.businessweek.com/technology/content/apr2009/tc20090410_507831.htm )]]>Apr 22nd 2009 12:42PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Compare these hypothetical scenarios: Apple spends 28% (of retail) on components, 12% on R and D, and 20% on software development. Amazon spends 50% on components, 5% on R and D, and 5% on software development.

BOTH companies then have 40% to distribute between marketing and profit. But if you just look at only one cost (components) alone, it might look like Apple is marking up twice what Amazon is, when they probably are not.

Lesson to be learnt: component costs alone to not encompass the totality of costs involved with developing, manufacturing and selling a product, and are therefore *useless* in determining a company's profit margin.]]>Apr 22nd 2009 9:57PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:03AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:14AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:12AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 4:01PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
For that markup, you get lifetime access to a 3G network with no stated caps, on a device that can download eBook content and (more importantly) can display websites. XKCD totally called this one - the Kindle is the ultimate Wikipedia machine - a one-time purchase grants you unlimited access for the life of the device to a concise source of the world's information, kinda like the Encyclopaedia Britannica, only small enough to fit in a purse or a decent sized jacket pocket (at least, if your jacket is a ScottEVest...). Not to mention Andy Ihnatko's favorite use, Google Reader. I don't own one, but I can totally see the value proposition there. If that takes a $160 markup on the unit's manufacturing price, so be it.]]>Apr 22nd 2009 9:14AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:16AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Now, if the kindle was sold for $899 - that would be an entirely different story. However, it's not.]]>Apr 22nd 2009 9:18AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:20AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:34AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:25AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
I.E. I am kinda having a hard time seeing the point here...]]>Apr 22nd 2009 9:29AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:35AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 9:36AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:00PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:00AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 6:20PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:10AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:21AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/If you think it's too expensive, don't buy it, end of story.]]>Apr 22nd 2009 10:51AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 10:32AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Additionally you need to pay salaries to 1.hardware development team , 2. device software development team , 3.server side software team 4. IT team to support server side software, 5. Project Managers , 6. employees involved in the supply chain.

For each employee , they also have non-salary costs of employing all those people ( office equipment and space, recruitment, training).

100.000]]>Apr 22nd 2009 10:44AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
Long-live the HEATH KIT business model !!!]]>Apr 22nd 2009 10:48AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
I also don't believe they have paid a significant fixed fee to Sprint for lifetime access to the mobile network. I'm betting that Sprint gets a piece of every file that is delivered wirelessly to the Kindle, which is why Amazon charges five or ten cents for converting pdf's and sending them wirelessly to the kindle, but does it for free if you use email and download it over USB from your PC. Also, lots of websites for newspapers that are free have monthly charges when read on the kindle, I would bet that's because Sprint wants a nickle or dime for each issue.

]]>Apr 22nd 2009 11:52AMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 1:09PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 1:03PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 1:35PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 1:50PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/
What about shipping costs? Packaging? Marketing? Software? Licensing?

Hit up your local community college and take an evening class or two...]]>Apr 22nd 2009 5:04PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 7:49PMhttp://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/http://www.engadget.com/2009/04/22/isuppli-359-kindle-2-costs-185-to-build-whispernet-says-shhh/Apr 22nd 2009 8:04PM