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.