Google Glass currently sells for $1,500 and costs just $152.47 to make. Does that mean Google is earning a hefty profit on each sale? Not at all, says research firm IHS.
In a new teardown treatment of Google Glass, IHS found that the cost, or bill of materials, for the wearable gadget rings in at $132.47. Adding a $20 manufacturing expense ups the total to $152.47.
The priciest part is the titanium frame assembly at $22, followed by the LCOS (liquid-crystal on silicon) panel at $20. The memory costs $10, while the processor is $8.85, according to IHS's preliminary teardown.
IHS's overall teardown cost came in higher than the $80 recently estimated by TechInsights' Teardown.com. However, a Google spokesperson told the Wall Street Journal that the Teardown.com estimate was "absolutely wrong."
And apparently IHS's estimate is off-base as well. A Google rep told CNET that "while we appreciate another attempt to estimate the cost of Glass, this latest one from IHS, like teardown.com's, is wildly off. Glass costs significantly more to produce."
Whatever the actual number, the manufacturing costs tell only a small part of the story. IHS's estimate does not include software, licensing, royalties, and other non-hardware expenses.
"As in any new product -- especially a device that breaks new technological ground -- the bill of materials (BOM) cost of Glass represent only a portion of the actual value of the system," Andrew Rassweiler, senior director of cost benchmarking services for IHS, said in a statement. "IHS has noted this before in other electronic devices, but this is most dramatically illustrated in Google Glass, where the vast majority of its cost is tied up in non-material costs that include non-recurring engineering (NRE) expenses, extensive software and platform development, as well as tooling costs and other upfront outlays. When you buy Google Glass for $1,500, you are getting far, far more than just $152.47 in parts and manufacturing."
Overall, IHS was impressed with the way Glass is put together.
"The frame is just one aspect of how Google is presenting Glass as a premium product," Rassweiler said. "The quality of the packaging and accessories, along with how the box contents are staged, gives the whole Google Glass experience a very high-end feel and appeal."
Rassweiler also lauded the device's LCOS display, calling it "pretty slick" and "providing a near-eye viewing experience that must be seen to be believed."
Google Glass is currently available only as an Explorer edition to developers and other early buyers willing to pony up the $1,500. As such, the device can and likely will be improved once it reaches mass-market status.
"Today's Google Glass feels like a prototype," Rassweiler said. "The design employs many off-the-shelf components that could be further optimized. If a mass market for the product is established, chipmakers are expected to offer more integrated chipsets specific to the application that will greatly improve all aspects of performance, including processing speed, energy efficiency, weight, and size. Future product revisions are sure to make strides in all of these areas."
Google has been working on a more budget-friendly consumer version of Glass that could hit the market by the end of the year.