iSuppli, a company well known for doing teardowns and providing estimates of both component costs and manufacturing has told 'AllThingsD' their preliminary results for the costs of the Nexus 7 and they come in quite a bit lower than the $184 we saw from UBMTechInsights last week. According to Andrew Rassweiler, the leader of the teardown team for iSuppli, the 8GB Nexus 7 costs $151.75 and the 16GB $159.25 with the difference being an additional $7.50 for the extra 8GB of memory. When marketing and distribution costs are factored in the company estimates that Google will break even on the 8GB model and make a small profit on the 16GB one. Mr. Rassweiler offered:
“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.”
Some other interesting tidbits from iSuppli's teardown include some comparisons with Amazon's Kindle Fire. Apparently the display in the Nexus 7's IPS display cost a bit more ($38) than the Kindle Fire's ($35) non-IPS. The camera on the Nexus 7 adds about $2.50 and the Nexus 7 also sports an NFC chip which the Kindle Fire lacks. Of course the Nexus 7 also features the Nvidia Tegra 3 quad core processor while the Kindle Fire has a last generation dual core. One last hardware feature that stood out was the combination gyroscope/accelerometer by Invensense. Typically these are separate chips but in this case they are combined.
Now an explanation for the Nexus 7 component cost discrepancy of $30 between the UBMTechInsights estimates and iSuppli is probably due to the fact that TechInsights never actually did a tear down of the tablet and only guessed at components without having one in hand. The iSuppli estimate is far more accurate. So it looks like Google is making a small profit overall on the hardware although they are certainly looking to make most of their profit by selling content from their Google Play store. We'll have pictures and more details when they become available with the release of the full iSuppli report.
IHS iSuppli Nexus 7/Kindle Fire Teardown Cost AnalysisIHS iSuppliAllThingsD