Overview / Main Features
The Kobo (Borders) eReader is a low cost 6-Inch E-Ink based electronic book reader that arguably sparked the eBook price war between Amazon and Barnes & Noble this year. Kobo, originally a spin off of Toronto-based Indigo Books & Music, partnered with Borders to deliver a new eBook solution to the marketplace. Priced originally at $150, the Kobo undercut the 3G wireless/dual screen design of the Barnes & Noble Nook ($260) which, in turn, had undercut Amazon's popular Kindle (at $360). Since then, eBook reader prices have come down significantly with prices coalescing at a point of $149 for a WiFi-only, 6-inch E-Ink display hardware. Additional 3G wireless capabilities add an incremental $40 to that based price.
Kobo, according to their press release, is a "global eReading service and thus, not a company familiar with hardware design or manufacturing but one that has expertise in software and electronic distribution of book content. In fact, this specific model under analysis does not offer any broadband wireless service nor WiFi connectivity. It does, however, offer Bluetooth personal area network capability to be used as a wireless ""side-loading" method with a mobile handset such as a Blackberry device running Kobo software.
As an eReader, the Kobo reflects a design that is focused on wringing out cost from the hardware BOM. Aside from the mandatory E-Ink display (which is identical to ones on the Kindle and Nook), the Kobo feature only a 1GB internal memory and a 1000mAh battery (Kindle 2 has a 2GB/1530mAh capacity). Additional content can be loaded via a SD card slot.
Pricing and Availability
Pricing - $149 USD at the time of release and now reduced to $129
Availability - US, Canada, UK, Australia & New Zealand
For the purposes of this teardown analysis, we have assumed a lifetime production volume of 750,000 units.
As a reminder, teardown volume production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed, volumes increment by an order of magnitude. Minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis.
As with the Amazon Kindle and the Barnes and Noble Nook, the Kobo eReader hardware BOM makes up a considerable amount of the retail price. This fact leads us to believe that the business model for eBook readers is one of near zero or even subsidized hardware but incremental revenue from eBook purchases.
Main Cost Drivers Representing ~86% of total materials cost
PVI - ED060SC4(LF) - Display Module Value Line Item - 6' Diagonal, Electrophoretic (EPD), 4-Bit 16-Level Greyscale, 600 x 800 pixels, 153um x 151um Pixel Size, 122.3mm x 90.5mm Viewable Area
Samsung Semiconductor - S3C2440AL-40 - Microprocessor - 32-bit ARM920T RISC Core, Advanced Micro Controller Bus Architecture (AMBA), 0.13um CMOS
Samsung Semiconductor - K9K8G08U0B-PCB0 - Flash - NAND, SLC, 8Gb (1G x 8bit)
Gold Road Electronic Co. - 6-Layer - FR4, Lead-Free
Power Source Energy - H503456 - Battery - Li-Ion Polymer, 3.7V, 1000mAh, w/ Integral 2 50mm Discrete Wires & Pin Socket
Hynix - H57V2562GTR-75C - SDRAM - 256Mb (4M x 16Bit x 4Banks), 133MHz, 3.3V (Qty:2)
Epson - S1D13521 - EPD Controller
AzureWave - Bluetooth - V2.1+EDR, Contains CSR BlueCore6ROM
Elpida - EDS51321CBH-7BTT-M-F - SDRAM - Mobile SDR, 512Mb (4M x 32Bit x 4Banks), 133MHz, 1.8V
ST-Ericsson - ISP1582BS - USB On-the-Go Peripheral Controller - Hi-Speed, Compliant w/ USB2.0
Direct Materials + Manufacturing $104.85
What Is Not Included in our Cost Analysis
The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.
Country of Origin / Volume Assumptions
The unit is assumed to be assembled in Taiwan. Furthermore, we have assumed that custom mechanicals (plastics, metals, etc.) were also sourced in Taiwan.
Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of 'finished' sub-assemblies (such as the battery), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.
Remember also that labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. ""Auto" inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pin count of the device. This calculation is affected by country or region of origin as well.
Design for Manufacturing / Device Complexity
The Kobo eReader has an overall component count of 545 (excluding box contents), of which 510 resides on the main PCB. In comparison, the latest Amazon Kindle has an overall complexity (excluding the wireless broadband module) of 603 parts. This complexity level is in keeping with what we expect from this product category.
Component counts have a direct bearing on the overall manufacturing cycle times and costs, and also can increase or decrease overall yields and re-work. Our calculations of manufacturing costs factor counts and more qualitative complexities in the design.
Note that manual labor has a much smaller effect on auto-insertion assembly lines (for the Main PCB, for example), where manufacturing costs are much more capital equipment intensive and driven by these investment costs.
Like other competitive eReaders on the market, the Kobo ultilizes an ARM-based microprocessor. In this case, we learn that Samsung is providing the 32-bit ARM920T RISC processing unit. Samsung also is the source for the 8Gb (1GB) NAND flash for onboard storage while AzureWave provides the Bluetooth solution featuring CSR's BlueCore6ROM and ST-Ericsson offering the USB on the go peripheral controller.
The major IC that manages the E-Ink display is again an Epson (S1D13521) EPD Controller. This is a very familiar part found in both the Amazon Kindle and Barnes and Noble's Nook which is used to control the similar PVI E-Ink display.
Here is a summary of the major components used in the Kobo eReader design:
- PVI - ED060SC4(LF) - Display Module, 6' Diagonal, Electrophoretic (EPD), 4-Bit 16-Level Greyscale, 600 x 800 pixels, 153um x 151um Pixel Size, 122.3mm x 90.5mm Viewable Area
- Microprocessor - Samsung Semiconductor - S3C2440AL-40, 32-bit ARM920T RISC Core, Advanced Micro Controller Bus Architecture (AMBA), 0.13um CMOS
I/O & Interface
- EPD Controller - Epson - S1D13521
- USB On-the-Go Peripheral Controller - ST-Ericsson - ISP1582BS
- Bluetooth - AzureWave, V2.1+EDR, Contains CSR BlueCore6ROM
- Flash - Samsung Semiconductor - K9K8G08U0B-PCB0, NAND, SLC, 8Gb (1G x 8bit)
- SDRAM - Elpida - EDS51321CBH-7BTT-M-F, Mobile SDR, 512Mb (4M x 32Bit x 4Banks), 133MHz, 1.8V
- SDRAM - Hynix - H57V2562GTR-75C, 256Mb (4M x 16Bit x 4Banks), 133MHz, 3.3V