Google Will Make $48 on Every Nexus 7
Google (NASDAQ: GOOG) will reportedly earn $48 in revenue from every standard Nexus 7 tablet that it sells.
That is according to MarketWatch, which reports that the cost of building the new device comes in at $152. IHS, which analyzed the seven-inch tablet, estimates that Google's expenses are $18 higher than what Amazon (NASDAQ: AMZN) spends on manufacturing the Kindle Fire.
However, when the Kindle Fire was released, IHS estimates that the company spent as much as $191.65 to build its first tablet. Other reports suggested that Amazon spent over $200 to manufacture the device, incurring losses that ranged from $1.70 to as much as $49.
Analysts believed that if Amazon was taking a loss, it did so with the hope of profiting from the sale of content, including annual subscriptions to its premium service, Amazon Prime. Similar to Netflix (NASDAQ: NFLX) and Hulu, Amazon Prime is a streaming video service that allows its users to view thousands of films and TV shows from a multitude of devices. But whereas Netflix and Hulu are exclusive to video viewing, Amazon Prime also provides its users with a number of other benefits, such as free standard shipping and discounted two-day shipping for Amazon shoppers.
Amazon is expected to bridge the gap between the original Kindle Fire and the third-generation iPad by building multiple versions of the next-generation Kindle Fire. One report suggests that there could be as many as four new tablets from Amazon, including one that features a high-resolution screen, and another that adds 4G connectivity to the mix. There are even reports that Amazon could release a larger tablet of some kind, though it is not expected to release a device as large as Apple's (NASDAQ: AAPL) standard iPad.
Apple is expected to invade Amazon's territory by releasing its first seven-inch tablet, the presumably titled iPad Mini. Rumored to have a high-end IGZO display and a thinner body than the standard iPad, the iPad Mini will reportedly go into production this fall in preparation for a November release.
Many analysts believe that by releasing an iPad Mini, Apple will simultaneously expand its share of the tablet market while cannibalizing some sales of the third-generation iPad. Rumored to be priced at $299, the iPad Mini would cost more than the iPod Touch but retail for less than the iPad 2, which currently sells for $399.
At $299, the iPad Mini would also cost more than the existing Kindle Fire and the standard Nexus 7. This could make it difficult for Apple to compete in the seven-inch market, which tends to cater to cost-sensitive consumers.
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