Google breaks even on Nexus 7 8 GB model
Google takes a hit to make Android survive in the tablet market
A teardown of Google's Nexus 7 tablet by IHS shows that the company is barely breaking even on the 8GB model of tablet. The physical teardown found the 8 GB model to have a bill-of-materials of $159.25, while the 16 GB model comes in at $166.75. After factoring other costs, IHS estimates that Google is breaking even on the $199 8 GB model, while making around $42 profit on the $249 16 GB model.
"Google's Nexus 7 represents less of an attempt to compete with Apple Inc.'s market-leading iPad, and more of a bid to battle with Amazon's Kindle Fire," said IHS teardown services senior director Andrew Rassweiler.
"The two platforms are similar in many regards, including the use of the 7-inch display, the eschewing of 4G wireless connections in favor of Wi-Fi, support for virtually identical battery lives and the same pricing for the entry-level models. However, the Nexus 7 has superior specifications to the Kindle Fire, giving it a more attractive feature set that may make it more desirable to consumers."
The Nexus 7's bill-of-materials is a mere $18 higher than Amazon Kindle Fire, despite the huge bump in specs. It's also worth noting the profitable 16GB model of the Nexus 7 is the only version available through other retailers, while the 8GB model is sold exclusively through the Google Play Store.
Google has also begun shipping pre-orders of the Nexus 7 sold on the Google Play Store.
"Locked and loaded, ready to play: we've started shipping +Nexus 7 pre-orders today," said the company in a tweet today.