Google decided to sell its Nexus 7 tablet for just $199 for the 8 GB version and $249 for the 16 GB version but the question is will Google be able to make any profit out of the tablet with such a low price tag.
According to a teardown of the Nexus 7 by IHS iSuppli, to estimate the cost incurred by Google to build the tablet, it has been noted that the 8 GB version of Nexus 7 cost Google about $151.75 whereas the 16 GB version is built for just $159.25.
This difference between the two versions of Nexus 7 is just $7.50 and this is because of the 8 GB and 16 GB memory chip that Google has used in the Nexus 7. For this difference of $7.50, Google charges $50 extra and this would return some profits to the search engine giant.
iSuppli estimates that when additional costs are added and considered Google will at least break even on sales of the 8 GB model, priced at $199—and will make a modest profit on the 16 GB version, which is priced at $249.
“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,” said Andrew Rassweiler, who has led the the teardown team at IHS iSuppli.
Below you can cost estimated by iSuppli where the Nexus 7’s 8 GB and 16 GB version are compared with Amazon’s Kindle Fire 8 GB version.
