Amazon Kindle 2 Costs $185.49 to Build

Amazon Kindle 2 costs $185.49 in materials and manufacturing costs, says an April 22 report by iSuppli Corp.'s Teardown Analysis Service.

Actual materials cost for the eReader device is $176.83, with an additional $8.66 from manufacturing expenses and battery. The company’s analysis did not include costs of intellectual property, royalties, licensing fees or elements such as software loading that cannot be revealed through a product teardown.

According to the report, the materials and manufacturing costs "represent 51 percent of the Kindle 2's $359 retail price."

Some 41 percent of the materials cost comes from the Kindle 2's $60 E Ink Corp. display module, which supports 16-level grayscale images.  

"The showcase feature of the Kindle is its E-Ink display, which not only is easy on the eyes, but also employs electrophoretic bistable technology that allows it to show an image even when it’s not drawing power," Andrew Rassweiler, director and principal analyst of teardown services for iSuppli, said in a statement. "This makes the Kindle 2’s display look like a printed page."

Amazon CEO Jeff Bezos rolled out the Kindle 2 in a high-profile February 9 presentation at the Morgan Library and Museum in New York City, capped with a reading by best-selling author Stephen King. The new device saw its debut some 14 months after the release of the original Kindle.

The Kindle 2, which can also store PDF and Microsoft Word documents for enterprise use, displays copy on the 6-inch grayscale screen, with texts navigable via a five-way controller.

While the rollout was accompanied by much fanfare, Amazon has found itself faced with a number of issues related to the device, including a lawsuit by the Author’s Guild, which argued that the Kindle 2's text-to-speech feature, which reads out loud, would decimate writers’ audio-book royalties. Amazon responded by offering publishers and authors the option to disable text-to-speech for titles.

On March 19, Google and Sony announced that the search engine giant would make its free public-domain eBooks available on the Sony Reader, increasing Sony's eLibrary to more than 600,000 volumes and presenting some added competition to the Kindle, whose library totals 245,000 volumes.

At the same time, Sony lowered the price of its PRS-700 reader to $350, bringing it to a competitive price point against the Kindle 2. Reports have stated that some 300,000 Kindle 2 units have been shipped by mid-April, nearly matching estimates of 400,000-500,000 units shipped for the first Kindle version.