Soon after Google revealed its Nexus 7, Andy Rubin told us that his company is selling the tablet at cost. Since the device is a mere $199, that shouldn’t come as much as a surprise. An Nvidia Tegra 3 device sold at that price point is definitely a sweet deal, not to mention consumers also get $25 to spend on apps in Google Play. A quick evaluation of the components used reveal that the Nexus 7 (8GB) is made of $184 worth of parts. The cost doesn’t include assembly, R&D, advertising and other expenses. Apparently, Google is distributing a powerful device with no profit margin added.
It’s a different story with the 16GB model, a 16GB NAND chip is only $8 more expensive than the 8GB one, yet Asus and Google is pricing it $50 higher. Since the 8GB model offers only 6GB of usable onboard storage, surely many buyers will choose the 16GB model instead. It is also interesting to note that a torn down of the $199 Amazon Kindle Fire when it was released showed that it used $201 worth of components.