Even at $199, Google stands to make a hefty profit on its new tablet device.
According to a teardown report from IHS, the cost of materials for one Nexus 7 unit is just $152, despite having technical specs that rival Amazon’s competing Kindle Fire tablet.
The analysis proves just how much the price of mobile components has decreased in recent years. It also makes you wonder how other Android tablet manufacturers think they can charge consumers upwards of $600.
Obviously, for Google and the Nexus 7, price was the number one concern. It let the market play out for a while before it stepped in and stamped its seal of approval on its own tablet.
And during that time, it realized that if consumers want a 10-inch, fully-functional, graphically intensive tablet, they’ll buy an iPad.
But if they just want something to check their emails, play a mobile game every now and then, and maybe read an ebook on the go, they want something as cheap as possible.
Amazon was the one that managed to really drive that point home with the Kindle Fire. And when it announced the $200 price point for that device, many analysts expected it would actually be selling the unit at a loss, hoping to recoup those losses in digital content sales.
But in fact, the Kindle Fire only cost $191.65 to build when it launched, and the costs have since been shaved to just $171.
But Google went even further, taking the cost of a 7-inch tablet all the way down to $152. The pressure is now on Apple to launch a product that can compete in this growing segment on the tablet market.