The Google-designed, Asus-built Nexus 7 is currently the best 7-inch tablet money can buy, but it isn’t the most profitable. Its biggest rival, Amazon’s Kindle Fire, is about $19 cheaper to produce.
While $19 might not seem like much, it adds up quickly when tablets are sold in the millions, as Amazon has done with the Fire and as Asus and Google hope to do with the Nexus 7.
The 8GB versions of both tablets sell for $200. But while the 8GB Nexus 7 has a manufacturing cost of $159.25 to build, the 8GB Kindle’s is just $139.80, according to a production cost estimate of the two slates based on product teardowns by the research firm IHS iSuppli. (The 16GB version of the Nexus 7 is far more profitable — it sells for $250 but costs just $166.75 to manufacture.)
But for less than $20, you get a lot more tablet in the Nexus 7. The major cost differences between the two devices are tied to the Nexus 7′s most distinctive hardware advantages over the Fire — its display, its CPU, a front-facing camera and a near field communications chip, said Andrew Rassweiler, a senior principal analyst at iSuppli.