The entry-level 8-Gigabyte (GByte) version of
Google’s new Nexus 7 media tablet carries a bill of
materials (BOM) of $151.75, according to preliminary findings
from the IHS iSuppli Teardown Analysis Service.
When manufacturing expenses are added, the cost increases to
$159.25. The high-end model with 16GBytes of NAND flash memory
has a $159.25 BOM, for a total cost of $166.75.
Table 1 presents the preliminary results
of the dissection of the Nexus 7, along with a
comparison toAmazon’s Kindle Fire. Note that
these teardown assessments are preliminary in nature, account only for
hardware and manufacturing costs and do not include additional expenses
such as software, licensing, royalties or other expenditures.
When additional costs are considered,
IHS estimates that Google will at least break even
on sales of the 8GByte model, priced at $199 — and will make a modest
profit on the 16Gbyte version,which is priced at $249.
Like Apple,Google has realized it can
boost margins by offering more memory at amore
profitable price point. Google is charging $50 more at
retail for only $7.50 in additional memory cost at the
BOM level. This adds $42.50 to Google’s bottom line on each sale of the
"Google’s Nexus 7 representsless of an attempt to
compete with Apple Inc.'s market-leadingiPad, and
more of a bid to battle with Amazon’s Kindle
Fire,"said Andrew Rassweiler, senior
director, teardown services for IHS. "The two platforms are
similar in many regards, including the use of the7-inch
display, the eschewing of 4G wireless connections in favor of
Wi-Fi,support for virtually identical battery lives and the
same pricingfor the entry-level models. However,
the Nexus 7 has superior specifications to the Kindle Fire, giving
it a more attractive feature set that may make it more desirable to
The Nexus 7 distinguishes itself from the Kindle Fire with its
higher-resolution display using in-plane switching (IPS)
technology. Google’s tablet also employs aquad-core Tegra 3
processor from Nvidia Corp., compared to the Kindle Fire’s OMAP
4430 dual-core processor from Texas Instruments Inc. The Nexus 7
also includes a camera and sports a near-field communications (NFC) chip
for wireless commerce - both features absent on the Kindle Fire.
These additional features give the 8GByte
Nexus7 a BOM that is $18 higher than the current
cost for the Kindle Fire. IHS now estimates the
BOM of the Kindle Firehas fallen to$133.80, down from
$191.65 at its introduction in November,due to
dramatic reductions in component pricing. These considerable
cost reductions provide a breather for Amazon in terms of the
subsidyitinitially paid to penetrate the market.
The component suppliers in the Nexus 7 offered few big
surprise. However, one novel part is the combination gyroscope/accelerometer from InvenSense Inc.
"Although we have seen a lot of InvenSense gyroscopes,
we have seen only one other combo device - a
partfrom STMicroelectronics in theSamsungGalaxy SIII.
Furthermore, the InvenSense part integrates onboard
processing, a newer feature for MEMS sensors,"