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Report: Kindle 2 costs $185.49 to build

iSuppli has done a teardown of the Kindle 2 and, after some careful analysis, it estimates that Amazon pays $185.49 to build its digital reader.

David Carnoy Executive Editor / Reviews
Executive Editor David Carnoy has been a leading member of CNET's Reviews team since 2000. He covers the gamut of gadgets and is a notable reviewer of mobile accessories and portable audio products, including headphones and speakers. He's also an e-reader and e-publishing expert as well as the author of the novels Knife Music, The Big Exit and Lucidity. All the titles are available as Kindle, iBooks, Nook e-books and audiobooks.
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David Carnoy

If you've been curious to know what it costs to make the Kindle 2, iSuppli has dismantled Amazon's digital reader, taken stock of all its components, and come up with an estimated price tag of $185.49--or roughly half the Kindle 2's retail price of $360.

That figure doesn't include the fee Amazon pays Sprint for the Kindle 2's built-in "free" wireless service or any marketing costs, which can be substantial. So the true "actual" cost is probably significantly higher, though Amazon obviously preserves some of its margin by selling direct to consumers.

If I had to guess, I'd say Amazon was making more like $100 on each unit, give or take $10. That's still quite decent, and when you factor in the high margins on Amazon's $30 optional Kindle 2 cover, things look even better.

So, yes, there's probably a little room for a discount. But if you're looking for a Kindle 2 price cut anytime soon, I wouldn't count on it. If anything, the first Kindle 2 deal you'll probably see is Amazon bundling in a cover as a freebie.

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(Source: iSuppli via Engadget)