Google Nexus 7 tablet costs $152 to build, teardown reveals

By on July 11, 2012, 4:30 PM

After performing a seemingly obligatory teardown of the Nexus 7, IHS iSuppli has determined the tablet's total build cost is $151.75 (8GB model). The 16GB model, which remains identical in every aspect aside from flash storage capacity, costs $159.25 to manufacture. Notably, the $152 BOM (bill of materials) is actually about $32 lower than last month's estimate by UBM TechInsights. Oh, and by the way, Asus is the company stamping these out for Google.

With the big G selling 8GB units for $199, their lower-end offering reaps a somewhat narrow profit margin compared to most other tablets on the market. Even with the slim profit per unit though, the Kindle Fire has shown us that companies can conceivably sell tablets under cost and still turn a profit through long-term revenue streams provided by sales of apps, books and media. 

While the sale of each $199 Nexus will yield only a small reward, the 16GB model's $249 price tag marks an considerable premium by comparison -- an extra $50 for merely $7.50 worth of flash chips. It would seem Google may also be leveraging high-end buyers to help subsidize the cheaper model for value-conscious shoppers. Selling memory, storage and other bells-and-whistles at a disproportionate premium has long been a common industry tactic, of course.

Powered by a Tegra 3 chip, the Nexus 7 is a reasonable iPad alternative in terms of performance, but its 7-inch stature and sub-$200 price tag also put it in squarely in Kindle Fire territory. Overall, it seems the Nexus 7 strikes a very attractive balance between speed, features and price. Check out the full review here.




User Comments: 9

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Guest said:

With those memory prices they could easily have made 32Gb and 64Gb versions without selling the tablet at cost price. Seems like they intentionally put low amounts of memory in to encourage cloud services to be used.

Ultraman1966 said:

Common knowledge mate, but it'll backfire because we don't have universal wifi with unlimited bandwidth...

waterytowers said:

Exactly my thoughts, if we had universal wifi it would be a better buy, or even a micro-sd slot would have made a difference to me. I don't want to be downloading my content all the time, not without an unlimited data plan, which is also ultra fast. I also don't want a USB key to be dangling off the device to access my content.

I think Google is bringing out this type of device a few years too early. Here in Aus mobile data plans are expensive and capped, so you either needs lots of local storage (32GB or more) or removable media (micro-SD), preferably both. A cover for the device could then have a small pocket for your removable media. Based on the cost breakdown it would probably have costed less than $50 to get the extra storage and micro-sd slot. Sell it for $50 more and you have a winner.

MilwaukeeMike said:

Makes you wonder what the expensive tablets cost to build like the iPad and the Galaxy 10.1.

IAMTHESTIG said:

"It would seem Google may also be leveraging high-end buyers to help subsidize the cheaper model for value-conscious shoppers"

Isn't that some form of communism?

yRaz yRaz said:

"It would seem Google may also be leveraging high-end buyers to help subsidize the cheaper model for value-conscious shoppers"

Isn't that some form of communism?

Let the rich NOT help the poor, like they've been doing in the US for the past 10 years. $250-300 is my sweet spot, I'd happily pay $250 to make it easier for someone less fortunate to have a similar product. Google is still making money off the 8GB unit so nothing is really being subsidized. It'd be closer to socialism anyway. I don't think people ever learned the difference.

MilwaukeeMike said:

/eyeroll @ yRaz... You're not paying an extra $50 to help someone 'less fortunate' (as if tablets were food stamps). They're charging an extra $50 because they can. Just like Apple does with it's iphone tiers. The pricing is no coincidence. The Nook tablet comes in two versions... an 8GB for $200 and a 16GB for $250. It DOES have an SD card though (which is awesome for rooting btw).

They're giving you the option to buy more storage and $50 is a nice round number that the competition already uses. Think of it this way.... Is $200 a fair price for a great tablet with 8GB storate? Most would say yes. Is $250 a fair price for a great tablet with 16GB storage? Again, most would say yes.

yRaz yRaz said:

/eyeroll @ yRaz... You're not paying an extra $50 to help someone

Google is still making money off the 8GB unit so nothing is really being subsidized

It's a business model we all work with all the time. My previous post was only true if what the guest said was true. It wasn't and I was trying to point that out. I know what I'm paying for and why, they're entitled to make money. As long as the mark up is only $100 instead of $300 like apple. IE, the sweet spot

siiix siiix said:

no thats smart marketing , establishing a higher market share.. then when the competition goes belly up they can claim the price and higher they prices ... no no its corporatism, a form of capitalism ... taking a short term loss for a long term mega profit

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