Nexus 7 Generates A Profit Of $15 Per Unit

Nexus 7

Nexus 7, the 7-inch Android 4.1 Jelly Bean tablet co-developed by Google and Asus was officially introduced on June 27th at Google I/O event. The tablet hopes to lure the customers with its really attractive prices.

As you probably know, the 8 GB model has a price tag of only $199, while the 16 GB Nexus 7 costs as much as $249.

Amazon’s tablet inspired the search engine giant to develop a cheap tablet with high-end specifications, after the Kindle Fire quickly climbed to the top of the best-selling Android tablets. The online retailer giant is losing money with each Kindle Fire it sells, but it recoups and makes profit due to the paid services that come along with their $200 device.

On the other hand Google and Asus managed to develop a similar product that is capable of generating a small profit. For only $199 you will get a 7-inch HD IPS display, quad-core Tegra 3 chipset, 8 GB of internal storage, 1 GB of RAM, front-facing camera, WiFi, Bluetooth and a 4,325 mAh battery.

After Tech Insights gave the Nexus 7 the “teardown” treatment, they were able to estimate the production cost. Google Nexus 7′s production cost is $184, therefore each unit generates a profit of $15, but Google and Asus will also have to recoup their budgets for marketing.

On the other hand it’s obvious that Google launched the Nexus 7 to be able to generate more revenue from Google Play and the services related to their app store, but also to penetrate the tablet market. Nexus 7 might be Google’s first step in the attempt to take on the iPad and the rumor mill speculates that the Mountain View-based giant is also preparing a 10-inch competitor for Apple’s and Microsoft’s tablets.

Apple is aware that a cheap quad-core tablet would harm their market share, so it was reported that the Cupertino-based tablet maker is readying a $300 7.85-inch iPad Mini.

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