That’s the conclusion of Citigroup analyst Mike Mahaney who looked at supply chain activity and concluded that there are a lot of initial start up activities for the company that don’t relate to actual Kindles or Kindle Fire tablets.
From All Things D:
“Mahaney and his team guess that Amazon’s phone may cost it $150 to $170 to build, and it’s conceivable that the company will sell it for something close to that price: “For a normal brand like HTC, they need to price the product at US$243 to make 30% gross margin. If Amazon is actually willing to lose some money on the device, the price gap could be even bigger.”

That’s the reason that a lot of people think that Amazon might be on its way to being a big hardware manufacturer, in the same league with Apple. Both companies make hardware AND content so they can lose money on the former and pick it up on the latter. There’s even been some speculation that in the next year ALL tablet makers besides Apple and Amazon will just give up because they can’t price low enough to compete, they can’t lose money because they can’t make it up.