Google is planning to offer the tablet in two versions: an 8 GB model for $199 and a 16 GB edition for $249. Only the 16 GB edition is available from retailers as the 8 GB version is only available from Google’s online store. NCIX Canada lists the Nexus 7 for $259.
According to HIS’ analysis, the cost of components (bill of materials) in the 8GB Nexus 7 is $151.75, adding the cost of labour increases it to $159.75. With the 16GB version, the base costs rise an extra $7.50 for the extra 8GB of memory to $159.25, giving it a final cost of $166.75 factoring in labour.
Considering the U.S MSRP of $249 for the 16GB version, Google is selling the unit at a premium of $42.50 on top of the $39.25 in profit it already makes.
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,” Andrew Rassweiler, senior director of teardown services for IHS, said in a statement. “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.”
In comparison, IHS estimates that Amazon’s Kindle Fire – which retails for $199 – had a bill of materials and labour cost of $201.70 at launch, and now $133.80 due to steep declines in component pricing.
The Nexus 7 will be available in mid-July.
Below is a chart that breaks down the cost of each component in the Nexus 7.