Amazon’s Kindle Fire has a Razor and Blades Approach

According to a tear-down study from market research firm iSuppli, Amazon.com (NASDAQ:AMZN) may take a small loss on its newly launched Kindle Fire tablet. Though the stock is up about 13% for the year-to-date, shares of Amazon were down about 3.6% on Friday.

Analysts have long estimated Amazon likely sells the product at or near a loss, but Amazon can get away with much thinner margins than dedicated hardware makers. Amazon makes their profits through sales of media content on their devices, as well as accelerated sales through its broader online marketplace.

The tear-down estimate does not include cost figures for software, licensing or royalties that Amazon may pay on the device. The tablet costs $199. It costs about 60% less than the cheapest iPad from Apple (NASDAQ:AAPL) — currently the king of the tablet market. Analysts expect the Kindle Fire to make the largest dent in the tablet market after the iPad. So far, other devices using Google’s (NASDAQ:GOOG) Android operating system have largely failed to generate strong sales.

“Among component suppliers, iSuppli says the biggest winner with the Kindle Fire is Texas Instruments, whose OMAP4430 application processor is the brains of the device. TI also supplies the power management and audio codec chips, with its total components accounting for about 13% of the total BOM of the device, the report said,” according to MarketWatch.

Here’s how these stocks are trading:

Amazon.com Inc. (NASDAQ:AMZN): AMZN shares recently traded at $197.14, down $7.38, or 3.61%. They have traded in a 52-week range of $160.59 to $246.71. Volume today was 8,438,477 shares versus a 3-month average volume of 6,719,680 shares. The company’s trailing P/E is 103.92, while trailing earnings are $1.90 per share. Get the most recent company news and stock data here >>

Apple Inc. (NASDAQ:AAPL): AAPL shares recently traded at $374.94, down $2.47, or 0.65%. They have traded in a 52-week range of $305.87 to $426.70. Volume today was 13,288,395 shares versus a 3-month average volume of 20,257,200 shares. The company’s trailing P/E is 13.55, while trailing earnings are $27.68 per share. Get the most recent company news and stock data here >>

Google Inc. (NASDAQ:GOOG): GOOG shares recently traded at $594.88, down $5.99, or 1%. They have traded in a 52-week range of $473.02 to $642.96. Volume today was 3,287,618 shares versus a 3-month average volume of 3,260,890 shares. The company’s trailing P/E is 20.28, while trailing earnings are $29.34 per share. Get the most recent company news and stock data here >>

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