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How Much Will Google Glass Cost? The Price of Production Offers Some Clues


Glass is one of the hottest Google's gadgets on the market, but its production cost is less than one-seventh of its current retail price. That is likely to change.

Then again, Google might look no further than its new hardware subsidiary, Motorola Mobility, to handle Glass manufacturing -- but perhaps not anytime soon. Motorola Mobility CEO Dennis Woodside told the Wall Street Journal that "it could someday be an opportunity."

Electronic manufacturing services (EMS) -- the companies that design, manufacture, and deliver devices to big brands like Apple (NASDAQ:AAPL) -- are known to operate on relatively thin margins, reportedly around 1.5%, or $8 per iPhone 5 (1.2%).

Kevin Keller, a senior principal analyst for IHS iSuppli, told Minyanville that the EMS margins generally don't exceed 5%, but may be significantly lower in some cases.

"I'd say that 1.5% is very low. Maybe someone like Apple may be able to negotiate for something like that with Foxconn, but on average, it's usually around 3% to 5%," he said.

Tearing Down Google Glass

Let's go down to the component level and try to estimate the production costs of Google Glass. A teardown of the device by some techies at Catwig uncovered all of its guts, making it relatively easy to explore all the components used in detail.

Minyanville asked some experts to help us estimate the production costs for Google, based on openly available information. Sergey Kovalev, head of production support at electronics design house Promwad, said that according to his engineering team's estimations, the cost of Google Glass materials should not exceed $194 per unit when produced in 10,000-unit batches.

Click to enlarge

That estimate matches at least two other expert valuations. Keller told Minyanville that he expected the bill of materials (BOM) for Google Glass to be "well under $200," and Scoble said the same thing.

Build Quality

A cut-and-dried list of components is one thing, but to estimate a device's worth, it's also necessary to consider how well the parts come together.

Looking at Glass, Star Simpson and Scott Torborg of write, "The build quality is what you'd expect from a device that costs as much as a high-end laptop. Everything fits together precisely, and has a solid feel and great surface finish."

Kovalev agrees. "I cannot say that the device design is simple, and that is based solely on commonplace components," he tells us. "It took a lot of work to design it."

Keller adds that none of the Glass building blocks can truly be called "off-the-shelf" parts: "Everything is customized to some degree, even if it's a semi-customized variation of what might be considered a standard product."

At the core of Google Glass is Texas Instruments' (NASDAQ:TXN) OMAP 4430 processor. It was released in 2011 to power a wide range of tablets and smartphones, including the Samsung (OTCMKTS:SSNLF) Galaxy Tab 2, the Motorola Droid RAZR, and Amazon's (NASDAQ:AMZN) Kindle Fire.
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