“Amazon’s low BOM cost for the Kindle Fire is the result of many factors,” said Andrew Rassweiler, senior director, teardown services for IHS. “The primary factor is Amazon’s product specification choices. However, Amazon also has capitalized on its rising purchasing stature. With media tablets from other companies failing to live up to expectations in recent months, Amazon’s relative clout among component suppliers has risen. Suppliers are interested in finding the next ‘rock star’ tablet that will allow them to sell millions of components for a single device. As a result, these suppliers are willing to cut better deals for Amazon.”
Reducing the cost of the Kindle Fire, Amazon included a lower-capacity battery than found in the iPad from Apple Inc. or the Playbook from Research In Motion Ltd.; basic 4Gbits of low-power mobile DRAM—while many newer smartphones now feature 8Gbits; and minimal box contents.
To further reduce the BOM, the Kindle Fire doesn’t include a combo wireless module that integrates wireless local area network (WLAN), Bluetooth and FM radio functionality. Such combo modules are commonplace in other tablet and smartphone designs. Instead, Amazon took a cheaper route, using a WLAN-only module from new supplier Jorjin. The Jorjin module is based on Texas Instruments’ WL1270, a WLAN-only chip that the IHS iSuppli Teardown Analysis Service has seen only once before in the Color Nook.
The Kindle Fire’s battery has less capacity at roughly 16 Watt-hours than the RIM PlayBook at about 20 Watt-hours and the Apple iPad 2 at 26 Watt-hours. Lower capacity equates to lower cost. This lower capacity is the result of the smaller screen, no 3G/4G wireless connectivity and a general lack of extra features.
Other thrifty features of the Kindle Fire include obvious characteristics such as the small 7-inch display, the omission of cameras, the lack of 3G/4G connectivity, and the use of plastic and stamped housing components rather than the aluminum unibody—such as that used in the Apple iPad as an example—or even magnesium housing employed in the current $79 Kindle design.
Despite all of these low-cost choices, many component suppliers will garner significant revenue from the Kindle Fire. This design represents a big win for Texas Instruments, which has all of the major integrated circuit slots in this design, and is likely the sole source for all of them. This represents at least $24 worth of Texas Instruments design in every Kindle Fire sold.