$199 Kindle Fire has $210 Bill Of Material

It's hardly surprising to learn that Amazon is losing money (but not much) on each Kindle Fire being produced, not unlike the strategy adopted by console manufacturers like Microsoft and Sony - pushing their hardware and reaping the benefits from services and software sold.

Market Research company IHS iSuppli did a preliminary hardware cost estimate, otherwise known as a virtual teardown, to find out how much roughly the tablet would cost.

Not surprisingly, the display and touchscreen components were the most expensive parts at $87, with the memory and application processor accounting for another $40. Altogether, IHS iSuppli argues, once the manufacturing and EMS margin costs are accounted for, the hardware cost to Amazon swells to just under $210.

This is comparable to the the cost of the RIM Blackberry PlayBook, which is widely believed to be the tablet template on which the Kindle Fire is built.

Furthermore, IHS iSuppli says that Amazon is expected to turn a loss of $11 per unit to a small $10 profit which underlines additional sales of at least $21 per unit, which is a very conservative estimate.