Google’s Nexus 7 tablet, which sells for $199, costs $151.75 to build, reports IHS iSuppli. They took a Nexus 7 apart in order to see what components are inside and to estimate what each of them costs. They shared the results with AllThingsD. The higher-end 16GB model, which sells for $249, costs $159.25, the difference being the cost of memory chips inside.
Andrew Rassweiler, who leads the teardown team at IHS iSuppli, says Google will break even on the 8GB model but turn a tidy profit on the 16GB model.
“Like Apple, Google realizes it can boost its profit margin by offering more memory at a stair-step price point. It’s getting $50 more at retail for only $7.50 more in hardware cost, which sends $42.50 per unit straight to the bottom line.”
The IHS iSuppli cost estimate is about $30 lower from an early estimate put out last month by another research firm, UBM Techinsights. However UBM’s estimate was made without having first obtained the hardware for analysis.
The Nexus 7 is similar to Amazon’s Kindle Fire tablet but has an Nvidia Tegra 3 processor, a higher resolution screen, Bluetooth 4.0 and Android 4.1. Perhaps spending another $3 to include a microSD card would lower the attraction of the 16 GB model.