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Google Nexus 7 Parts Cost $18 More Than Kindle Fire
judgecorp writes "The parts for a Google Nexus 7 tablet cost only $18 more than the materials for an Amazon Kindle Fire, according to a teardown by IHS. This means while Amazon initially took a loss on each tablet sold, Google will break even on its 8Gb tablet, and make a small profit on the 16Gb model."
Congratulations on your life's greatest achievement. You can now die happy.
On a side note, I'm not quite sure how they "break even" on a material cost of $151.75 for the 8GB version when selling at $199. To me, that sounds like a profit of $47.25. (Though I'm sure some of that goes to ASUS.)
Of course this doesn't bode well for competitor tablets. How many Google/Amazon business models are there that can afford to subsidize the tablets?
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Shipping, packaging, advertising, and continued tech support costs are probably factored in.
There are costs besides those of the materials - like assembly, shipping, and storage.
Er, they kind of have to pay for marketing, etc... a material cost is just... well, materials.
There are lots of other costs besides the the components. Marketing, R&D, Overhead etc.
This makes sense.
Andriod is really a platform for Google to sell their services (or promote ad based ones). It's not surprising they'll sell an at-cost device. They're also really nice machines, and set the bar for what a "low cost" device should really have. Fast quad core, latest OS, plenty of ram, access to google play(store). Great way to bump inferior devices off the market that would degrade user experience and cost them service revenue.
Even the small storage and lack of sd card is a "feature". - It provides a place to differentiate other tablet makers, who can add a card slot and more storage and charge a price premium over the nexus. (Well, that and the low storage encourages users to get their data from google online services rather than store it locally)
I recently picked up a galaxy tab 2 7.0 (Before google announced their offerings). Great little device. I love it, but clearly inferior to the new google equivalent. Sorta wished I waited.
Is this taking in consideration of bulk part order?
I'm pretty sure that these devices have more than 1 and 2MB of storage. I don't expect editors to edit or anything, but are nerds seriously still having problems with the idea that the abbreviations for units are case-sensitive? K is not k and b is not B and so on?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
In addition to the other points, if the tablets are being sold through other vendors (BestBuy, newegg) then Google only get wholesale (less than retail).
while(1) attack(People.Sandy);
FYI
What quantity is this costing based on? Something tells me that Samsung gets different prices that some Joe on the street, especially when buying something in millions of units at a time. Sure, a processor chip might cost $50 if you buy one and $10 if you buy 1000. What happens when Samsung buys a million of them, which could be the entire output of the manufacturer for several months? At those quantities you also have fun things like the buyer demanding that they get the right to go to other fabs so they can get the quantity they need - they essentially license the rights to produce the chip themselves.
Of course, it is then a short hop down the road to the manufacturer simply being added to the stable of companies owned by Samsung. Or not quite owned but invested in such that the manufacturer can produce the quantities that Samsung desires.
Such cost estimates are garbage because Samsung isn't talking about what they are really paying for parts. So all you have is guesswork based on public information. I would offer that neither Amazon nor Samsung is paying the sort of prices that are publicly available and special deals are being cut in exchange for who-knows-what.
In electronics there are three quantity levels that count: one, 1000 and the entire output of the manufacturer for months. When you scale up to the last one, the buyer gets to dictate what the price is going to be and the seller is pretty much at the mercy of the buyer.
Scratch shipping.
In some countries Samsung is already selling Android (2.2) phones not much more expensive than an feature phone. So I doubt anybody can sell any cheaper that and still get some measure of quality. And I doubt that Google would be interested in selling cheap smartphones since that segment is already well taken care of by the cellphone service providers (via smoke-and-mirrors subscription plans).
Google will have to pay its retailers about 20% retail markup and definitely lose on each sale. Apple and Amazon wont have to pay the retail markup.
And Google has been offering $25 in Google Play credit.
I got a pre-order email that quoted a price of $249, $50 more than the pundits were estimating. That dampened my enthusiasm just a tad, might wait for Kindle Fire 2.
The make 30% of each book, movie, song, and app sold. So Amazon can essentially give its tablets away at cost and still make lots of money. I wonder if GooglePlay has similar profitability.
Because you don't know anything about Business.
Break Even doesn't equal sum(part) Break Even = Sum(Parts)+(Labor Rate+Benifits)/(Number of units)+(Total R&D costs)/Projected Unit sales+(Facility Costs)...
At $151.75 of parts and selling for 199 actually shows a really good work flow process.
Back during 1990's .COM boom a lot of companies didn't really understand the full cost on how to run a business, The consumers got flooded with a lot of inexpensive stuff (Which seems good) but then the companies shortly went out of business. Leaving us with cheap products that have no future. Or services that we enjoyed that went away, or have quickly gotten very expensive.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
All individual parts are rarely made in the same place, so even if they plan to do drop shipping, chances are at some time at some location, something was shipped, and was counted as a cost of production.
More Twoson than Cupertino
You're forgetting hookers and blow.
Faster! Faster! Faster would be better!
Shipping, packaging, advertising, and continued tech support costs are probably factored in.
Hello, 2010 called and they want their distribution model back. This is Google; as soon as the device is assembled by their robot army, Larry Page winks at it while wearing his Google Glasses and a nexus portal opens on your front doorstep (which was previously triangulated to within +/- 0.1m by a Google Street View car) where the tablet materializes.
In rural areas not covered by Street View, a team of Google Glass-wearing skydivers will drop it by.
A CEO's time ain't cheap (neither is airplane fuel) but given how many they can churn out in an hour (and the 99.99% Street View coverage) the extra $47 goes a long way. Of course until the first lawsuit is filed because a tablet materialized through someone's cat.
Any half-competent CFO knows that hookers and blow is overhead and deductible as an employee incentive under "medical expenses". And as a side note, I've always wondered why non-marring razor blades and plastic straws dont come standard with tablets and their conveniently-sized glass covers? There must be an app for that??
Why is this not +5, Informative?!?
I call it 'The Aristocrats'
According to some reviews, the Nexus 7 is the fastest Android tablet to date. Add the retina display, and you got yourself an expensive little piece of kit.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
Break Even doesn't equal sum(part) Break Even = Sum(Parts)+(Labor Rate+Benifits)/(Number of units)+(Total R&D costs)/Projected Unit sales+(Facility Costs)...
Just to nitpick (because overall your post is solid): Break even means your selling price equals your costs, which in general means selling price = material + labor + overhead. Facility costs, R&D, shipping, office staff and all of that is generally rolled into overhead.
I call it 'The Aristocrats'
The problem with most of these sorts of analysis is that they have no real way to know what sort of volume discounts Google or Amazon are getting. You can ask what the prices are but when you start getting into millions of units that usually takes more than a phone call. Pricing on electronics components is strongly a function of volume. (I know because I buy them daily in my day job) Spot market rates aren't usually the same as contract rates either and for the sorts of volumes Google would deal in we're probably talking contract rates.
In short, they may have made some assumptions about volume discounts but unless they have inside information they cannot possibly actually know what Google is paying.
Why the obsession with physical media? Both the Kindle and Nexus 7 assumes that you are consuming media from the net.
Jesus's clone riding a genetically resurrected dinosaur in the name of logistics, man. Are you aware that net access is not omnipresent, and despite the media/geek-wannabe hype, it will not be for years to come? It might be omnipresent in our cubicles and wired dwellings, but once we step into the sunlight (${DEITY:-FSM} knows some of us do), we don't even get a guarantee of cell phone signal everywhere.
Do you think wifi fares better?
Let's forget the hyperbole for a second. You want to have access to your media anywhere. When you are a car passenger. On a train. On an airplane. When you are camping, or at the beach. To read your books or play videos to entertain/control/mind-numb-into-submission your toddlers. That's why you need permanent storage.
It is one of the reasons I've been hesitant to buy the Kindle Fire or similar devices without a micro-sd port. I do frequent trips (mostly to Japan), and I want to have access to my media (for the same reasons outlined above) when having a 16+ hour flight coupled with 2+ hours in the train upon arrival (or when I'm in a train between cities.) I can't do that unless I purchase a WIFI receiver (typically with a monthly subscription). That's a situation that repeats itself when traveling overseas (or even when traveling within the country).
So physical media matters for practical reasons. It is unpractical for Amazon and Google to presuppose users will have access to the net anytime anywhere. There is a reason why tablets and netbooks either have a usb/micro sd port, or manufactures like Apple and Samsung provide usb/micro sd adapters for their devices.
Lay the infrastructure that makes this possible first, and then we talk about replacing physical media with oooooooooo the cloud. This should be an obvious thing for the ./ geekterati. Don't know why it is not.
Because the pimps and Colombians dont have mod points, the software guys ran off to write an app for cutting lines on tablets, the vendors are repackaging razors and straws with Apple logos on them, and anyone in marketing is calling backpage.com looking for social media tie-ins. The conspiracy guys think I'm a DEA shill looking phishing for anyone that understood the joke. That doesnt leave many mods left!
Apparently, to Google, "pre-order" means you're the last person to get one. They're supposed to hit retail stores today and they're already on eBay. Meanwhile, I check my "Google Wallet" account and it just says that Google "received my order" since June 28th. No updates, no shipping information, no reply to my e-mail, nothing.
The very least they could do is provide some damn communication on why they're shitting on their pre-order customers.
If the Nexus 10 ever becomes a reality, don't "pre-order" it! You'll get it sooner from Gamestop apparently. Fuckers!
And why I will never buy one
AccountKiller
On e.g. flight that lasts 11 hours ? I would like a little bit more than that, and a choice in what I want to watch... 16GB is nothing: I normally take a 40GB HDD and 2 32GB SD cards with me in my TF101 Transformer tablet package.
First, I already pay $60 per month for Internet access at home. Why should I have to pay more in order to have something to do away from home? Ideally, an application would download data to the device's memory while online, store my changes while I work offline, and then upload the changes once I'm online again.
Second, Virgin Mobile's cheapest Broadband2Go plan is $35 per month, not $30 per month. It's limited to 2 GB per month unless the customer moves a couple hundred miles to a 4G city, so it can't replace one's home ISP. What carrier are you looking at that includes either standalone mobile broadband for $30 per month or a smartphone plan including tethering for $35 per month, which is $30 per month more than the $5 per month that I currently pay Virgin Mobile for dumbphone service?
Sales tax?
signature is pants
The goal here is to kill the PC outright
Hence the approval of AIDE on the Google Play Store. AIDE lets people make an app for an Android device on a (docked) Android device.
You're forgetting hookers and blow.
Fine! I'll go build my own lunar lander, with blackjack and hookers. In fact, forget the lunar lander and the blackjack. Ahh, screw the whole thing!
Don't know, I don't know such stuff. I just do eyes ...