The bill of materials for Amazon’s coming Kindle Fire tablet...

to settle for a razor-thin margin on sales of devices and digital content in order to achieve the larger goal of promoting” merchandise sales at its online store, IHS said. Adding on manufacturing expenses, it estimated that the total cost to produce the Fire will be $209.63. Amazon said last week that it will ship the Fire for $199 Nov. 15 (WID Sept 29 p4). Factoring in costs outside of materials and manufacturing, as well as the expected sales of digital content per device, IHS estimated that Amazon will “generate a marginal profit of $10 on each Kindle Fire sold.” But the Fire and “content demand it stimulates will serve to promote sales of the kinds of physical goods that comprise the majority of Amazon’s business,” IHS said. “Amazon doesn’t make a substantial profit on sales of Kindle hardware and content such as e-books and music,” the research company said. IHS estimated the Fire’s touch-screen display is “the most expensive subsystem of the device,” at $87. It estimated that the applications processor costs $15. The IHS iSuppli Teardown Analysis Team will “conduct a complete physical teardown” of the device after it ships, IHS said. The Fire “represents an enhancement of the e-book reader, which will serve to expand both the e-book reader and tablet markets,” IHS said, predicting the device “will be a successful product” that could become the No. 2 tablet, behind the iPad.