Google will reportedly make only $15 on each Nexus 7 tablet, according to estimates from research firm UBM TechInsights.
CNET questions why Google would sell the tablet at such a thin profit margin.
“It’s possible that the Nexus 7 has been designed to either snatch away the consumers who are buying Kindle Fires or Barnes & Noble’s Nook tablets, or lure enough of a market share that constructing additional revenue streams based on the use of the tablet becomes worthwhile,” reasons the post.
The Nexus 7 has a higher resolution screen than the Kindle Fire and has a front-facing 1.2 megapixel camera, whereas the Kindle Fire does not have a camera with video chat capabilities.
Analysts suggest the Kindle Fire generates an estimated $46 per sale and a $499 iPad generates $171 per sale.
“If the estimated cost of construction proves sound, then the Nexus 7 must be intended for use in other ways to claw back some of the potential lost profit margin Google has established for itself,” notes CNET. “What has the company chosen? According to reports, online advertising revenues will make up the shortfall. In comparison, Amazon relies on downloaded, purchased content — and does well by it.”
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