iSuppli Teardown Pegs Nexus 7 Build Cost At $151.75 For 8GB/$159.25 For 16GB

[Babyfacemagee]

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 Analysis

IHS iSuppli
AllThingsD

[comiskeybum]

So after you factor in marketing cost and shipping cost they probably are making very little on the 8GB version.  The 16GB is probably seeing like a 10% gross profit after shipping and handling and marketing. 

[radiocycle]

So knowing this, will I be able to upgrade my 8GB myself for, like 8 bucks or so?

[Babyfacemagee]

No, the ram inside is not user upgradeable hence why many are purchasing the 16GB to begin with.

[samalex]

Great info, thanks for posting... Since their profit does seem to be higher on the 16 Gig model I wish they would've invested alittle into an HDMI port or rear camera on it which would've given people more of an incentive to buy the $249 unit.

[ibm650]

Great info, thanks for posting... Since their profit does seem to be higher on the 16 Gig model I wish they would've invested alittle into an HDMI port or rear camera on it which would've given people more of an incentive to buy the $249 unit.

Their model is to use the cloud - so they will not do that.  The sd addon is probably less than a dollar.

[samalex]

Great info, thanks for posting... Since their profit does seem to be higher on the 16 Gig model I wish they would've invested alittle into an HDMI port or rear camera on it which would've given people more of an incentive to buy the $249 unit.

Their model is to use the cloud - so they will not do that.  The sd addon is probably less than a dollar.

I agree, they hope people will use Google Drive, but that's just not a practical option in many cases, especially since the device is wifi only.  I for one hope to carry thing thing with me to work, school, and pretty much everywhere... and with no wifi in many places I can't depend on online storage 100% of the time.

But from their perspective the more content people put in the cloud the more data they can mine.   I love Google, but dang if they're becoming Skynet.