The Nexus 7 cost Google $184 to build

July 8, 2012

    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?


    • Richard A Smith

      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.

    • Kurleigh Martin

      8 Gb ordered on launch day

    • Yanyan

      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

    • Vince Miniscalco

      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

    • Karissa Demi

      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.

    • Brandon Schaus

      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.