Google and Asus may be turning a healthy profit on the Nexus 7 Android tablet after all. The Google Nexus 7 is one of the best and cheapest Android tablets to date, and was launched last month at Google I/O 2012. It is priced at $199 for the 8 GB version and $249 for the 16 GB version, and comes with some impressive hardware running Android 4.1 Jelly Bean.
When it was launched, everyone assumed that Google and Asus might be selling each tablet either at break-even levels or making just a tiny profit on each tablet, just like the Amazon Kindle Fire.
However, a recent iSuppli component teardown of the Google Nexus 7 suggests that they might actually be making a decent profit on each unit sold.
According to the IHS iSuppli analysis, the 8 GB Nexus 7 costs nearly $151.75 to build, while the 16 GB Nexus 7 costs around $159.25 to build. This means a neat profit margin of around 24% on the 8 GB variant and 36% on the 16 GB variant.
This means that Google or Asus are definitely fighting off the domination of the Apple iPad to gain market share, but not at the expense of their profit margins. It also means that should Apple choose to launch an iPad Mini, it could launch a similar tablet with higher margins given its excellent economies of scale and Tim Cook’s operational genius. Apple could also easily charge a premium and price its iPad Mini at around $299, ensuring a much juicier margin.