When Google announced the Nexus 7 for a mere $199, many speculated that Google might be using a similar model to the Amazon Kindle Fire. Sell with an extremely thin margin, if any, and make it up with content. This seems to be partially true. While the margin is extremely minimal for the 8GB version of the Nexus 7, the 16GB version seems to pack a nice profit for Google and ASUS.

According to a recent teardown of the Nexus 7, the hardware components are worth $184 each. This doesn’t factor in any marketing, shipping, research and development or manufacturing costs. If we use Amazon’s Kindle Fire as an example, the Kindle Fire at launch cost Amazon $185 in parts and then an additional $16 to get them into customers hands. To say the least, Google seems to be on the right track here and the $199 Nexus 7 is one heck of a deal.

So, now we know that Google has a very thin profit margin on the 8GB model, what about the 16GB model? Remember, this is the version that everyone wants. The 16GB version is for those whom haven’t bought in cloud storage or for those that plan on using their tablet for tons of games. These are going to be extremely popular, just popular as their smaller brother. I’ll tell you right now, 8GB worth of memory does not cost $50. A rough estimate puts 8GB of NAND at around $8. Google is going to make a large portion of their Nexus 7 profit off of the 16GB variant.

Don’t forget that technology prices get cheaper over time as newer, faster, smaller models make their way to consumers. For now, Google is telling the truth when they say they are selling the Nexus 7 for virtually no margin at all, selling it at cost. A few months down the road as new technology emerges an older technology gets cheaper, Google will be turning a nice profit on their new tablets.

So which one did you buy? The 8GB or the 16GB?

Derek Ross
I am an Android Enthusiast. I’m on the pulse of the latest Android news and write content about Android daily. I’m constantly scouring the Internet for the latest Android news, apps, games, Android ROMs, hacks, security, tips, tutorials and mobile devices. I’m a large supporter of our beloved Android Community and am always willing to help with anything Android related, just ask.
  • I already ordered the 16. One can never have too much storage. ;-)

  • Sammy Brence

    I bought the 16. Only because most of time where I work the WiFi is ify at best and all my stuff is in the cloud. So being able to store offline is a must for me. As I use my tablet for work religiously.

  • Steve Rodrigue

    8gb for me.

    • derekross

      That’s what I ordered. Hopefully it ships in 2 days, if the speculations turn out to be true.

  • 8 Gb ordered on launch day

  • I would be perfectly happy with 16GB but I’d definitely go for anything bigger if there’s an option to do so. :D

  • Mark Eno

    16GB bigger is better right!!!!! lol

  • No wonder there is no Sd card slot

    • EddieT

      who cares.. on my SGS2 (with 16GB internal) i hardly ever use my 64GB SD card i installed in it.. i mostly use the USB to connect to removable flash drives

  • 16. Just because.

  • Jj

    Google charges shipping and Staples has free shipping the measily 25$ store credit means nothing if you can save up to that amount on shipping at staples. Fail.

  • 16 GB, go big or go home.

  • shonangreg

    (copied and pasted from engadget)

    The Nexus 7 is relatively
    crippled compared to other, upcoming 7″ tablets. If the Nexus 7 had
    onboard microSD and hdmi-out or MHL and was subsidized by google, then
    how would anyone else be able to sell 7″ tablets? ASUS, acer, and
    Samsung would not be able to compete, and google would have to carry the
    whole market by itself. This is not at all their model for android.

    The Nexus 7 is all about competing with amazon, further expanding the
    android ecosystem, getting new android customers, AND leaving the
    full-featured market for 7″ devices to independent manufacturers.

    I want a 7″ tablet that can be an eReader and a personal video player
    with a lot of storage. The Nexus 7 cannot do this and never will short
    of soldering on more circuits. Just getting USB-OTG storage will
    require rooting the Nexus 7 and adding in StickMount. 95% of Nexus users
    will not do this.

    So, acer and the others can rest easy. They can offer better quality
    devices for slightly higher prices and even have a larger potential set
    of customers to appeal to due to the Nexus 7 bringing more people into
    the world of android. (Having one android device makes getting a second
    much easier — the apps migrate transparently…)

    The Nexus 7 is not a smart purchase unless you only want a much
    improved Kindle Fire. For general use, wait a month or so for the acer
    A110 or whatever other Kai-SOC-based 7″ tablets get released soon.
    They’ll be $250 or so as well, and acer and ASUS have been trying hard
    to establish a reputation for upgrading the version of android on their
    tablets quickly. ASUS even sent out free dongles for the GPS screw up
    they had on the Transformer. That was an expensive mistake for them.

    ASUS especially, and acer too, have positioned themselves as
    first-tier android tablet makers. Samsung is second tier for purists due
    to their added UI and slowness to update (and protect their bootloader,
    denying root, etc.) Lenovo is third tier due to their inability to even
    admit there were any problems with their problem-plagued ThinkPad
    Tablet (malfunctioning GPS, breaking micro-USB and power button and
    volume rocker, locked bootloader, uncommunicative developers, slow and
    infrequent updates, etc.)

  • Mat Art

    8gb very tight budget, very disappointed with android though because i cant get some of my favorite art apps and one that i like to use keeps freezing. The tablet is great, when is the software going to catch up?

  • SalsaDoom

    Eh. Pass. Transformer prime has SD, micro and USB support out of the box. For those that have a nexus 7, you can get USB adaptors to use external storage just fine.