Based on preliminary analysis, IHS found that the 8GB Nexus 7 carries a bill of materials (BOM) of around £97. Add in manufacturing costs and that increases to £103. The 16GB model, meanwhile, has a BOM of £103 or £108 with manufacturing costs. All figures are estimated conversions from US dollars based on today's currency exchange rate.
Google sells the 8GB Nexus 7 for £160 and the 16GB for £200
Basically, Google is charging £32 for about £5 worth of additional memory, which adds £27 to Google's bottom line on every sale of the 16GB Nexus 7. As a result, IHS concluded that Google will break even on the 8GB Nexus 7 and make a modest profit on the 16GB version.
"Google's Nexus 7 represents less of an attempt to compete with Apple Inc.'s market-leading iPad, and more of a bid to battle with Amazon's Kindle Fire," Andrew Rassweiler, senior director of teardown services for IHS, said in a statement. "The two platforms are similar in many regards, including the use of the 7-inch display, the eschewing of 4G wireless connections in favor of Wi-Fi, support for virtually identical battery lives and the same pricing for the entry-level models."
Still, Rassweiler said, the Nexus 7 has superior specifications to the Kindle Fire, which might "make it more desirable to consumers." That includes a higher-resolution display, a quad-core Tegra 3 processor, a camera, and NFC chip for mobile payments.
IHS estimates that the Kindle Fire currently has a BOM of just over £85, down from around £120 at launch thanks to a drop in component pricing.
What about the breakdown? A full list is available in the image below, but the most expensive item on the Nexus 7 is its £25 display, followed by the £15 touch screen. The processor, meanwhile, costs £13.50 and the mechanical components are a shade under £13.
Google has said the Nexus 7 will be released in mid-July.
(Ed. note: ITPP recently reported that the Nexus 7 and priced up by Fudzilla at £120. The figure is considerably higher than the high-end £108 estimation ventured by IHS iSuppli, possibly due to fluctuations in component pricing or different teardown calculation methods.)