The Fire Phone's So Pricey Because It Costs Amazon a Ton to Build

We wanted Amazon's recently released Fire Phone to be many things, but most importantly, we wanted it to be (relatively) cheap like all Amazon hardware. So when Jeff Bezos announced the Fire Phone's $650 price tag ($200 on contract), there was some definite sticker shock.

How could Amazon—a company that built its reputation on low-balling the competition—ask premium price for its first smartphone? Well, the answer is pretty simple: the phone is expensive as hell to make.

Recode reports on a soon-to-be released teardown from research firm IHS, which says the Amazon Fire Phone costs $205 to build. Depending on what spec breakdown you reference, the Fire Phone is more expensive to make than an iPhone 5S, but not nearly as pricey as Samsung's Galaxy S5.

This little bit of spec sleuthing only confirms Amazon's intentions of competing in the premium market, but the real issue is that it may have dumped all its cash in the wrong place. The most likely money pit is the Fire Phone's Dynamic Perspective, a neat little trick which requires four built-in, front-facing cameras to track your face on three axis. This creates fun little "hey dude, check this out" moments, but doesn't really offer much else as we mentioned in our review. It's likely that those four little cams put Amazon over budget, forcing them to cut a few corners on things like the display. The Fire Phone 720p IPS LCD screen only cost the company $27, compared to Apple's $43, 326 ppi display and Samsung's hugely expensive $63, 432 ppi screen.

It's not about what internals you pack into a phone, but how you use them. You can't just throw expensive sensors into a device without any real user benefit, and now Amazon finds itself in a bit of a bind. Maybe the Fire Phone's future iterations will find safe harbor in cheaper waters. [Re/code]

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