This time next year, the Kindle Fire will cost $100 to make – think of that, next time someone tells you that Amazon won’t make money on tablet hardware.

People keep talking about the just about break-even $199 price of the Amazon Kindle Fire as if it’s a loss-leader “Razors and razor-blade” model, but it’s simply not.

First of all, anyone who’s bought a razor recently will notice they cost a lot more than the piece of plastic it’s made out of justifies – the “Sell razors cheap to sell blades” model is long dead.

Secondly, The Kindle Fire might cost $200 to make today, but not that Amazon know they’ve got a hit on their hands, they can go back to suppliers, make bigger orders, and reduce the cost price by perhaps $20 immediately.

Over the next year, as the hardware used becomes more commoditised, and the suppliers become better at making it for less, the price of this kind of hardware will go through the floor, and Amazon will be sat waiting, ready to make plenty of profits on their new product line.