Wednesday, July 11, 2012
Nexus 7 Tablet Teardown: +4% Mem. Cost Add $50 Profit
"Andrew Rassweiler, who leads the teardown team at IHS iSuppli, reckons that Google will break even on the 8GB model but turn a tidy profit on the 16GB model. “Like Apple, Google realizes it can boost its profit margin by offering more memory at a stair-step price point. It’s getting $50 more at retail for only $7.50 more in hardware cost, which sends $42.50 per unit straight to the bottom line.”
Google’s Nexus 7 Costs $152 to Make, IHS iSuppli Teardown Finds
July 11, 2012 at 5:15 am PT
Google’s Nexus 7 tablet may be all about an attempt to compete with Apple’s incredibly popular iPad, but when you crack it open it sure looks an awful lot like Amazon’s Kindle Fire inside. (Read Walt Mossberg’s review of the Nexus 7 here.)
That’s the impression that analysts at the research house IHS iSuppli got when they did just that: They took a Nexus 7 apart in order to see what components are inside and to estimate what each of them costs. The early verdict, shared exclusively with AllThingsD, is that the low-end eight gigabyte model of the Nexus 7, which sells for $199, costs $151.75 to build.
The higher-end 16GB model, which sells for $249, costs $159.25, the difference being the cost of memory chips inside.
Andrew Rassweiler, who leads the teardown team at IHS iSuppli, reckons that Google will break even on the 8GB model but turn a tidy profit on the 16GB model. “Like Apple, Google realizes it can boost its profit margin by offering more memory at a stair-step price point. It’s getting $50 more at retail for only $7.50 more in hardware cost, which sends $42.50 per unit straight to the bottom line.”
The IHS iSuppli cost estimate is about $30 lower from an early estimate put out last month by another research firm, UBM Techinsights. However UBM’s estimate was made without having first obtained the hardware for analysis.
The Nexus 7 is similar to Amazon’s Kindle Fire tablet in many respects, but in others it has better features. For one thing, the Nexus has an as its main computing engine the Nvidia-made Tegra 3 processor. It’s a four-core chip, meaning it has four main processing brains. The Kindle Fire has a two-core OMAP 4430 processor from Texas Instruments. TI however supplied two chips for the Nexus 7, one a power-management chip, the other a low-voltage transmitter.
But the Nexus 7, manufactured by Asus for Google, also has a better display with a resolution of 1,280 pixels high by 800 pixels wide versus 1,024 by 600 for the Kindle Fire. Rassweiler said the display uses a technology known as in-plane switching, and added $38 to the hardware cost of the Nexus 7, versus $35 for the display in the Kindle Fire, Rassweiler said.
The Nexus also has a camera that added $2.50 in cost to the Nexus, and which the Kindle Fire lacks. The Nexus also has a chip from NXP that supports near field communications (NFC) a close-range wireless technology that’s intended for wireless commerce transactions. Broadcom supplied GPS receiver chips to support mapping functions.
One other part caught Rassweiler’s attention: A gyroscope and accelerometer from Invensense. While it’s common to see Invensense gyroscopes, it’s rare to see it combined with into the same chip with the accelerometer. Both are used to determine position and movement of the device. The only other combined gyro-accelerometer seen before, Rassweiler said, was seen in Samsung’s Galaxy SIII smart phone and was made by the European chipmaker STMicroelectronics.
All told, IHS iSuppli figures the Nexus 7 costs about $18 more to make than the Kindle Fire. But that’s likely to change soon. A New Kindle Fire with a better display this fall.