Is Amazon losing $50 per Kindle Fire? I don't think so

Comparing the Kindle Fire to the RIM PlayBook, it seems unlikely that Amazon is losing $50 per device.

According to Piper Jaffray's Gene Munster, Amazon is losing $50 every time it sells a Kindle Fire. But do the numbers add up.

Munster said this in a note sent out to clients shortly after Amazon unveiled the new Kindle tablet.

Apple is also monetizing the hardware upfront with a 30%+ gross margin on the iPad, whereas Amazon is likely losing about $50 per Kindle Fire.

$50. That's a lot of dough to make back per unit sold. But wait ... Munster doesn't have a teardown or anything to go by, so this could be a number pulled out of the air.

The best information to go on is the teardown of RIM's PlayBook tablet, which shares a common heritage with the Kindle Fire. So we can start there.

According to UBM TechInsights, a bill of materials for the PlayBook is $205. That's just the materials and nothing else - no R&D, no marketing, no assembly. Given that the Kindle Fire is a cut-down PlayBook, it's safe to assume that the bill of materials for the Fire is less than that of the PlayBook.

Patrick Moorhead, Corporate Vice President and Strategy and Corporate Fellow at AMD, takes $250 as a starting cost for the PlayBook (as opposed to the $205, factoring in additional costs) and subtracts from this features not present on the Kindle Fire. Here are his numbers:

Based on these numbers (and I like the feel of these numbers), the Kindle Fire is about $50 cheaper to produce than the PlayBook. While that doesn't allow for huge profits per tablet (like Apple enjoys with the iPad), it also gives the company more wriggle room, and makes a $50 loss per Fire seem unlikely.

I eagerly await a teardown of the Kindle Fire.