We’ve already mentioned one teardown on the blog, but another one has raised an interesting point, are Google making a loss on the Nexus 7?
Techinsights analysis of the make up materials of this tablet estimates that it’s costing about $184 in terms of components alone. This isn’t the total cost to produce the tablet of course, you have to factor in everything from R&D through to assembly and logistics.
If these cost estimates are correct then it is likely that Google are actually selling each Nexus at a loss.
Google Playing the Long Term Game
Of course this isn’t the whole story. It is not uncommon for companies to sell hardware at cost, or even at a loss (eg games consoles) with a view to make up the cash through other revenue streams.
In the case of Google their eyes are firmly upon building up the Play store. The tech giant still needs to do a lot of work to catch up with Apple but as the iTunes app eco system has proved, there is an awful lot of money to be made by selling cheap apps to millions (billions?) of people around the world.