Amazon's $359 Kindle 2 Costs $185.49 to Build

Amazon's second iteration of its popular eBook reader, The Kindle, costs only $185.49 to build, $173.51 less than its retail price, according to an iSuppli Teardown report (see below). When the conversion costs -- manufacturing expenses and the battery -- are stripped away, the price inflation weighs in at more than 50 percent. So what's making the Kindle 2 so pricey?

E Ink

The Kindle's E Ink display gobbles up 41.5 percent ($60) of the materials cost, as it's the most advanced technology included in the device and also the centerpiece of the reader. Funny, given that the latest E Ink upgrades have provided users with more eye-squinting headaches than previous versions.

Wireless

The original Kindle's wireless broadband card was built into the main circuit board. The Kindle 2's connectivity module, provided by Novatel Wireless, has been divorced from the core and accounts for 27.3 percent ($39.50) of the total cost.

The Rest

iSuppli doesn't touch a variety of other Kindle 2 components that raise its price. For instance, the teardown company does not factor in software, intellectual property, licensing fees, shipping, logistics marketing, or any of the other components necessary to not only have a physical device, but a physical device that functions.
Voracious readers fear not: there still exist justifications for purchasing the Kindle 2, despite its hefty teardown price -- but only if you consume many books per month