According to a teardown analysis by IHS iSuppli, the Nexus 7 tablet costs around $152 to build, giving Google a modest profit on the 16GB version of the slate.
IHS agreed in its report that Nexus 7 competes more with Amazon’s Kindle Fire than with Apple’s iPad:
“Google’s Nexus 7 represents less of an attempt to compete with Apple Inc.’s market-leading iPad, and more of a bid to battle with Amazon’s Kindle Fire,” Andrew Rassweiler, senior director, teardown services for HIS, said in a report today. “The two platforms are similar in many regards, including the use of the 7-inch display, the eschewing of 4G wireless connections in favor of Wi-Fi, support for virtually identical battery lives and the same pricing for the entry-level models. However, the Nexus 7 has superior specifications to the Kindle Fire, giving it a more attractive feature set that may make it more desirable to consumers.”
The materials of the 8GB Nexus 7 version cost $151.75 or $159.25 after the manufacturing costs are added to the sum. The 16GB Nexus 7 version on the other hand costs $159.25 or $166.75 including manufacturing overheads.
“Like Apple, Google has realized it can boost margins by offering more memory at a more profitable price point,” IHS iSuppli said. “Google is charging $50 more at retail for only $7.50 in additional memory cost at the BOM level. This adds $42.50 to Google’s bottom line on each sale of the high-end model.”
IHS iSuppli reported in November that the materials cost of the Kindle Fire including manufacturing is $201.70, meaning that Amazon was selling the Kindle Fire at a loss by pricing it at $199. Now the Kindle Fire materials cost has been reduced to $133.80, not including manufacturing expenses, thanks to the decline in component pricing. “These considerable cost reductions provide a breather for Amazon in terms of the subsidy it initially paid to penetrate the market,” IHS iSuppli said today.
Via : Forbes