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Amazon Kindle Fire selling at a £2 loss

We knew Amazon's tablet was selling for a loss, but the disparity is less than previously thought -- only just under £2.

We reported previously that Amazon's Kindle Fire was selling at a loss -- according to estimates. Well now the same company has brought down its estimate, saying each Kindle Fire costs $201.70 to make, reports the Mail.

And considering the device sells for $199, that's a loss of about $3 (£2) per unit.

Previously iHS iSuppli said the Fire cost $209.63 to make, but it's since revised this since the product went on sale in the US this week. We're still awaiting an announcement here in Blighty.

It's still the polar opposite business model to Apple and its iPad. Apple sells high-priced gadgets, whereas Amazon is happy to take a hit on the devices themselves in return for high sales; then it plans to make the money back selling e-books, music, TV shows and films through its online store for using on the device.

The Fire has only just gone on sale, but if rumours are correct, Amazon has enormous faith in the model. It's planning a mobile phone, according to a note from a Citigroup analyst. The handset will be manufactured by Foxconn, the same company that makes the iPhone, and will go on sale towards the end of 2012. It'll reportedly have a Texas Instrument OMAP 4 processor similar to that found in the Fire tablet.

The note even reveals it'll cost around £100 to produce each device. And thanks to Amazon's business model, the phone shouldn't cost any more than that for us customers. Happy days.

So there are certainly savings to be made, but would you still prefer Apple's products over Amazon's? Let us know on our Facebook page. And if you're wondering if you should wait for the Fire to come to these shores, check out our handy guide.