We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message

Nexus 7 Costs $160 to Make, Says iSuppli

Google's Nexus 7 might turn a small profit after all, according to a third-party estimate by IHS iSuppli.

Google's Nexus 7 might turn a small profit after all, according to a third-party estimate by IHS iSuppli.

For the 8 GB Nexus 7, the bill of materials totals $151.75, or $159.25 with manufacturing costs included, iSuppli said. The bill of materials for the 16 GB model is $159.25, or $166.75 with manufacturing.

Factor in additional costs such as distribution, marketing and tech support, and iSuppli estimates that Google "will at least break even" on the 8 GB Nexus 7, priced at $199, and will turn a "modest profit" on the $249 version with 16 GB of storage.

Estimates aside, Google Senior Vice President of Mobile Andy Rubin has already said that the Nexus 7 won't rake in the profits. "When it gets sold through the Play store, there's no margin," Rubin told All Things Digital last month. "It just basically gets (sold) through."

But there's a bit more room for profit in the 16 GB model, which is priced $50 higher the base model even though the storage only costs $8 more. That would explain why retailers such as Gamestop and Staples are only selling the 16 GB version. At the moment, the Google Play store is the only place to get the 8 GB version.

The bill of materials estimate from iSuppli is another example how cutthroat the low-end of the tablet market can be. When the Kindle Fire launched last year, iSuppli estimated a total cost of $209.63, which meant Amazon was losing about $10 on every tablet sold.

It's worth keeping all this in mind, in light of rumors that Apple will enter the small tablet market later this year. Apple's supply chain management is good enough that the company may be able to beat Google on the cost of materials, but I'm skeptical of speculation that Apple will release a 7.8-inch tablet for $200. If Apple wants to profit from the hardware, a $250 to $300 tablet seems more likely.

Follow Jared on Twitter, Facebook or Google+ for even more tech news and commentary.

IDG UK Sites

Best camera phone of 2015: iPhone 6 Plus vs LG G4 vs Galaxy S6 vs One M9 vs Nexus 6

IDG UK Sites

In defence of BlackBerrys

IDG UK Sites

Why we should reserve judgement on Apple ditching Helvetica in OS X/iOS for the Apple Watch's San...

IDG UK Sites

Retina 3.3GHz iMac 27in preview: Apple cuts £400 of price of Retina iMac with new model