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Google Glass teardown shows it costs only $80 to make

by Mark Tyson on 5 May 2014, 10:30

Tags: Google (NASDAQ:GOOG)

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An analysis released by Teardown.com claims that Google's $1,500 (£899) Glass only costs the tech giant $79.78 (£47.28) to make, after dissecting the wearable smart computer system. The spectacles are currently only available to those enrolled in the Google Explorer program, and have been so successful that Google may struggle to meet demand for months to come.

The teardown figure came from an estimation of the costs of testing, assembly and parts. A breakdown of numbers is shown below:

As we can see, the most expensive component is the processor costing around $13.96. Other 'pricy' components include the 16GB storage estimated at $8.18, 1GB of RAM at $4.68, and the connectivity component costing $10.79.

Bearing in mind that Google Glass does not actually have the ability to hold lenses, and users who require a prescription will have to spend an extra $225 for different frames, Google sure looks like it is crafting a very high gross margin product. However, according to the Telegraph, a Google spokesperson said: "While we appreciate teardown.com's attempt to guess the cost of Glass, their estimate is wildly off. Glass - parts and all - costs significantly more than their estimate."

What teardown.com has neglected to include are the costs of; designing Glass, engineering, user testing, research & development, marketing and technical support. Sci-Tech Today also pointed out that the pricing of some components by teardown.com seems unusually low. Similarly the assembly costs may have also been underestimated as the device is built in California rather than off shore at this time. However this is the modus operandi for a teardown - it is simply the sum of the parts, machining and labour without considering how much software and tech costs to develop.

Nevertheless, even taking into account the additional factors and investments involved in developing Glass, it seems that the $1,500 price tag represents an Apple-shaming eye-watering margin for this new wearable Google tech. Such is the demand for Glass prototypes Mountain View is probably not going to have worries over pricing issues. It's interesting to contrast this Glass pricing strategy with the comparative value on offer from Google's Chromebooks, Nexus smartphones and tablets. Hopefully Google will be offering its own cost breakdown to fully rebuke the teardown component cost claims.

HEXUS Forums :: 16 Comments

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$2.15 to assemble and test a brand new device made in really small numbers (compared to stuff like smart phones)? $3 to build small numbers of the display units? Google have made a few thousand of these by hand, not the millions of units that usually get made for iPhones etc.

Talk about not having a clue as to the costs involved in bringing a new product to market!
It's an irrelevant number anyway. The only one that matters is what people are prepared to pay - and whilst I won't be shelling out $1,500 any time soon, or $150 for that matter, I'll bet a huge number would.
Meh, let the hipsters and early adopters recoup google's R&D cost for them. With unit costs that low, I'm sure the price will tumble; should it ever become mainstream.
I thought the user testing was being done by those who payed the $1500 since its still classed as a prototype
- and whilst I won't be shelling out $1,500 any time soon, or $150 for that matter, I'll bet a huge number would.

$150 , you surely would would you not.

Anyway, Teardown.com's figure is complete bogus rubbish. They should prove it by building one for $80.