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Amazon Kindle Fire selling at a loss

A market research company has estimated Amazon is selling its Kindle Fire tablet at a loss, attempting to make it up on content sales.

Well we can't say it comes as a massive surprise. Amazon is selling its Kindle Fire tablet at a loss, according to a market research company. We suppose the low price did seem a bit too good to be true.

Each tablet costs Amazon $209.63 (£134) to make, according to IHS iSuppli's breakdown of materials and manufacturing costs, reported by Reuters. So with the $199 (£127) price tag, Amazon is losing about $10 (£6) a tablet. Good business? Or short-sightedness?

IHS Suppli estimates the components for the Kindle Fire cost $191.65, but once you add manufacturing costs that comes to $209.63. Amazon is hoping to recoup the loss through the tablet encouraging more people to buy more movies, e-books and music to enjoy on the device. It's similar to a razor being sold cheap but the company making a profit on the blades. Just don't try shaving with the Kindle Fire.

The $199 price was lower than expected, prompting a flurry of excitement. Then we learned the Fire wasn't coming to the UK yet, and our enthusiasm was dampened a little.

Amazon CEO Jeff Bezos announced the Fire last Wednesday. It's a 7-inch model that features a heavily-modded version of Android and Amazon's custom Silk browser that promises faster web surfing and increased battery life. The browser has prompted security fears, however, as Amazon will see every page you visit.

We had a hands-on with the Fire (yes, you could say we played with Fire), and liked the clean, simple interface designed to appeal to technophobes, as well as the more pocket-friendly size. Now all we have to do is lobby Amazon to bring it to the UK.

So do you like the look of the Kindle Fire? And would you buy one over an iPad 2? Let us know on our Facebook page.