According to an teardown analysis by IHS iSuppli, the Nexus 7 tablet costs $159.25 to build and manufacture (8 GB model). While the 16 GB model that retails for an additional $50 costs $166.75 to build and manufacture, even though it is identical in every way except for the flash storage capacity.
Initially, it was assumed that the Nexus 7 was being sold at cost or even below cost with its $199/£159 retail price (8 GB model) and would then hope to make money through the Play Store. This is what Sony did with the PlayStation 3 and more recently with the launch of the Amazon Kindle Fire. However, it appears that Google is making a tidy profit on the Nexus 7. While the different of cost prices between the two models is just $7.50, the 16 GB model will retail later this month for $249/£199, bringing in roughly $80 of profit for Google.
The 7 inch IPS 1280×800 display is by far the most experience component at $38. Following this is the $24 touchscreen assembly and the $21 Nvidia Tegra 3 T30L chipset.
KitGuru says: Of course this isn’t the first, nor will it be the last case where a manufacturer adds additional flash storage for seemingly extortionate prices.