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The Guts of a Nexus One Cost $174.15

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January 12, 2010 5:44:36 PM

I would be really interested to see how much profit Google is making per phone. With manufacturing, software, royalties, there is no way that adds up to even $450. Google must be making a killing on each phone. Correct me if I'm wrong, of course.
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January 12, 2010 5:47:18 PM

I believe that's confidential.

But article said "That's thanks to a massive subsidy from T-Mobile though, as purchasing the device direct from Google will cost you a wallet-rattling $529."
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January 12, 2010 5:50:58 PM

wow what a ripoff! seriously do they really need a 300% margin. I know the research and the labor and everything but seriously they don't need a 300% margin to recover costs. The only way to make cellphones cheaper is to get rid of carrier subsidies and let the cell phone makers compete in price.
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January 12, 2010 6:01:13 PM

I don't know why you guys waist your time trying to quesstimate what it costs to produce a device. You
have no idea at what volume they are buying at and therefore a reasonable price can not be achived. Stop
waisting your time and stop missleading people.

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January 12, 2010 6:09:20 PM

hakestermanI don't know why you guys waist your time trying to quesstimate what it costs to produce a device. Youhave no idea at what volume they are buying at and therefore a reasonable price can not be achived. Stopwaisting your time and stop missleading people.

so what your saying is it's even cheaper than the estimate. wouldn't that mean it's a bigger ripoff?
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January 12, 2010 6:09:39 PM

Good point. This is just the cost of the components. What about the R&D and manufacturing? R&D is usually the main reason new devices cost a lot at first and then drop in price...
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January 12, 2010 6:11:57 PM

Read correctly people... 174$ in parts. It does not involve research, software, support, packaging and all other extras. The phone is but a piece in the whole system. There's more to selling this kind of hardware than just the pieces itself.
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January 12, 2010 6:19:28 PM

anyone whom taken computer engineering would know that it is 3x-4x the cost of the raw material that manufs aim for when a product hits the market, which will cover r&d of software and hardware, support, updates and other things for the life of the device.
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January 12, 2010 6:22:38 PM

eyemaster ..you sound like the RIAA (its more than a plastic disk). Give it up.
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January 12, 2010 6:28:15 PM

Raid3reyemaster ..you sound like the RIAA (its more than a plastic disk). Give it up.

The problem with the statement to "give it up" is that he's right. You can't sell something for a tiny margin and expect to make money. Engineers cost a lot, and manufacturing adds a significant cost as well.
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January 12, 2010 6:40:27 PM

Manufacturing, Labor and Overhead (MLO) - 10-20% (maybe less depending on Google's deal with the manufacturer)
Tooling charges - Depend on tooling complexity and time. 60 days standard price - 30 day turn on the tools 3-5x standard price.
Shipping Costs - 10-20%
Import fees - (usually included in shipping, maybe not)
Packaging & manuals - $5.00
Included accessories (plug in power, USB, etc) - $10-$15
Also there is money associated with yield. Low yield means higher costs. I highly doubt that a device this complex has 100% yield.

There are a lot of other items that companies add to the MSRP than just the parts inside the case.
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January 12, 2010 6:58:12 PM

Don't forget insurance taxes payroll etc. and yeah profit. If they don't make a profit then why bother to put out a product at all cause they are not in business for charity contrary to popular belief.
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January 12, 2010 7:28:12 PM

Hmm.. Curious. I suppose if they sell more of them the volume would encourage them to lower the price. I also have to wonder how much of this is going to other companies in patent royalties. Still, for a wallet raping (not rattling) $529, you think it would come with more storage space. Oh well, at least it can use SD cards ^_^
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January 12, 2010 7:46:12 PM

If you think the nexus one is being sold for too much, look at the iPhone which sells for over $800 off-contract (FYI the manufacturing cost of the two devices is nearly identical) and the iPhone is a product which probably generates apple more income after the sale than Google via itunes and the iphone app-store.
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January 12, 2010 8:10:35 PM

No one is forcing me to buy this phone so I could care less what it costs.

They're charging what the market will bear. Afterall, people paid top dollar for a Tickle Me Elmo - a $50 device whose parts probably cost all but $3.
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January 12, 2010 11:16:31 PM

Well if it's not worth the money they are asking then people wont buy it. Let the free market, and competition, determine what the price should be. Regardless of the cost, some people think it's "not fair" to pay a certain amount over the costs of the device.

Eventually the cost will come down due to competition.... so just wait a few my friends, this isnt water, milk or bread, it's the latest in technology meant to be a luxury. Anyone is free to go buy the components themselves, write their own software, and put together the equipment and sell to the masses if they feel they can do better for cheaper. And companies will!

Also something that I didnt see mentioned here is the cost in marketing. To get people to *WANT* the phone enough money has to be pumped into commercials, advertisments, market research, sales etc...
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January 12, 2010 11:28:59 PM

That's basic operations and production management. Wholesale cost out the factory door - about twice what it cost to build it. That includes both the fixed and variable costs. Retail cost - about twice that. Doesn't matter if you are talking about a cellphone or a microwave oven.
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Anonymous
January 13, 2010 6:49:30 AM

Your forget that there is an amount of money it cost to actually develop the phone let alone the software that runs on it. They people a good sum to create these ideas/products and must make the money back plus some.
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January 13, 2010 2:10:54 PM

it's cool to know the price of each component of a device. But the bottom line is the price of the finish product. It take times and efforts to come up with an idea to put it all together. Materials' cost is cheap compare to human enginuity.
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January 13, 2010 2:11:37 PM

ingenuity.
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January 13, 2010 4:44:15 PM

Lousy analysis is lousy. Guess everyone else pointed it out already. You can buy all the food you need to make a 4 star dinner, but its not just the parts that make the product.
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