Amazon’s new tablet computer, the Kindle Fire, has slim margins at its $199 retail price. Admittedly, this product is trying to change the way we read books. It is therefore posi- tioned so as to penetrate a revolutionary new target market, the twentysomethings who are comfortable never actually holding hard copies of their textbooks, novels, newspa- pers, or magazines.
Listed here is data on hardware components, software licensing, and other costs: dis- play screen $35, touchscreen $25, assembly labor $11, battery $12, processor chip $18, advertising campaign $7, DRAM memory chip $5, software licenses $37, 8 GB memory module $8, wireless WiFi/Bluetooth $6, hardcase and other materials $34, R&D expense $12, overhead $14.
Questions
- Would you expect the Apple iPadsc ontribution margin percentage to exceed handset margins of 13 percent to 17 percent at Samsung, RIM, and Nokia? Why or why not? Why would their margins be higher? Be specific.