Teardown.com reports $1500 Google Glass costs $80 to make

That is one heck of a markup.



  • You foo!

    Teardown.com reports ad-funded The Loop costs $0 to make. Why you running ads?

    • http://www.laugh-eat.com/ kyron

      but that isnt true — hosting and providing content costs more than $0. if one is to make a PT or FT career by it, one must both cover costs and generate a profit. business 101, durr.

      that aside, i think the point of this story is obvious — for each new apple device there is a similar story about how much cheaper its BOM is than the retail price, in a strange attempt at price-shaming. but why apple? why do other brands not get this same attention? like google glass?

      so stop being obtuse.

      • http://www.acid-product.co.uk Ian Davies

        <whooooooosh!!!>

        • http://www.laugh-eat.com/ kyron

          i dont think so.

          • http://www.acid-product.co.uk Ian Davies

            I do. You foo!’s obvious sarcasm completely passed you by.

    • http://alphaefficiency.com/ Bojan Djordjevic

      Lame attempt at trolling.

  • http://mangochut.net/ mangochutney

    Not necessarily.

    While the BOM might suggest a pretty cheap device, what holds true for bullshit tear downs of Apple products by the likes of iSupply, is even more relevant for a product like Google Glass.

    Google made no secret of Glass being a genuine beta product or prototype run. As such the components are completely custom and producing a small batch of custom chips and the finished products adds an enormous amount of money to the bare cost of the chips involved. I’m sure Google got a good deal from the suppliers and manufacturing parties, but it’s still massively expensive.

    In the case of this trial and evaluation run by Google not only distribution and support infrastructure had to be created, but also controlling to determine the product’s strengths and weaknesses as perceived by the users.

    Last but not least are the indirect costs that are always hard to attribute to a single product, like design and engineering, which happens before a single piece of silicon is soldered onto a board.

    With the exception of the last point, I feel like Google wanted to make sure that a risky product trial such as this would recoup at least some of the costs that went into its creation.

    That is not to say that they haven’t placed a huge markup on the device; whether it’s because they wanted to find out how much consumer surplus they can extract for a device like this, or because they wanted to limit the trial audience by making the price so high that it only appealed to a particular group of people that could not only afford a device like this, but also had the necessary ego to wear it often and use it under what Google might consider realistic testing situations.

    P.S.: Then again, I don’t think they’ve expected Robert Scoble and his shower.

    • rattyuk

      So, to be clear, you think it is a great idea to get your developers to fund your upfront costs for a product that doesn’t actually do anything right out of the gate? Google have the money to pay for their own R&D but with glass they are handing it off to the developer community.

      I also fear your “or because they wanted to limit the trial audience by making the price so high that it only appealed to a particular group of people that could not only afford a device like this” is a bit like clutching at straws.

      Innovation is not just coming up with ideas. Innovation involves delivering a working product that ships and actually adds to the customers life, needs and wants. I have yet to see a use for Glass that is actually useful and not creepy.

      • http://mangochut.net/ mangochutney
        So, to be clear, you think it is a great idea to get your developers to fund your upfront costs for a product that doesn’t actually do anything right out of the gate? Google have the money to pay for their own R&D but with glass they are handing it off to the developer community.

        Whether or not it’s a good idea remains to be seen, but personally I don’t think it is one. Personally I think relying on developers to come up with use cases and an ecosystem demonstrates Google’s lack of vision and confidence in the product. Glass is a potentially innovative and potentially disruptive product but—and I’m paraphrasing Darby Lines here—in the hands of the wrong company that doesn’t treat it the way Apple would; putting their entire weight behind this. Then again, Apple wouldn’t publicly test products before declaring them ready for consumers.

        I also fear your “or because they wanted to limit the trial audience by making the price so high that it only appealed to a particular group of people that could not only afford a device like this” is a bit like clutching at straws.

        I don’t believe I am. They needed people who would be comfortable wearing it and being seen wearing it. Those are usually very outgoing people, often with something to prove or people that derive their self-worth from the opinions and envy of others. One way to achieve this is creating exclusivity.

        Innovation is not just coming up with ideas. Innovation involves delivering a working product that ships and actually adds to the customers life, needs and wants. I have yet to see a use for Glass that is actually useful and not creepy.

        I agree. Innovation, as defined by Porter, is a new way of doing things that is commercialised. As such Google Glass might be a new way of doing things (and it’s also being perceived as new) but as a public beta run, it has not yet been truly commercialised. I also agree with the last point here and my answer goes back to Glass being in the hands of the worst possible company for a technology like this.

        • http://www.laugh-eat.com/ kyron
          One way to achieve this is creating exclusivity.

          agreed. i think google set the price artificially high to limit the logistics need for testing and managing.

          • Sigivald

            And because they’re not interested in mass-producing it yet; if they were $120 they’d have sold (e.g.) 50 times more of them.

            (Which is not actually superior from their point of view, at this point, because they’re not trying to make money selling them [so the per-unit profit is irrelevant), but to get developers to do something with them [thus also most of the 50 times more would be people who would never write a line of code on them, or even be useful testers].)

            To mass produce Glass (in the million or hundred thousand range) would require a more expensive production setup than to make a few thousand (or ten thousand) of them.

            I share skepticism about this all being a “good idea” in terms of product and design output, but the price is not remotely based on pure component cost.

            R+D isn’t free, and they’re not trying to amortize it out over a million (or ten million) units…

  • http://www.acid-product.co.uk Ian Davies

    Oh come on! I can scarcely believe I’m having to say this, as an Apple aficionado on an Apple-focussed blog, but when sites like teardown.com mis-label the cost of an Apple product’s bill of materials as its “manufacturing cost”, and then declare the difference between that and its retail price to be “markup”, they are booed off the stage, and quite rightly so.

    Component cost. Manufacturing cost. Research & Development (hardware and software). Support costs to assist developers. I’m no fan of Google, and I’m not claiming that the markup might not still be very healthy, but the original article is disingenuous, at best, and your linking to it is no different.

    I expect better from The Loop.

    • rattyuk

      Here’s the thing. People accuse Apple of having high markups, but even if the components are 10x what teardown dot com are claiming that is still a hefty markup. For a product that doesn’t actually have a use, to be sold to “developers” to see if they can pay Google to come up with some use cases.

      I suppose this is what passes for “innovation” these days.

    • stupid

      Yeah, this wouldn’t fly for an Apple device, and for it to be applied to a very limited-release prototype is stupid.

    • http://www.laugh-eat.com/ kyron

      huh? i think the point of this story is obvious — for each new apple device there is a similar story about how much cheaper its BOM is than the retail price, in an attempt at price-shaming apple or casting them in a greedy light. but why apple? why do other brands not get this same attention, like this google glass device? and if these numbers are accurate, it’s way, way higher than the margin apple earns.

      both of those are newsworthy.

      • Sigivald

        Which would be fair … if Glass were a mass-market device that Google was trying to sell at retail for general sale.

        But it ain’t.

        I think it’s a ridiculous product, but this is even more stupid than the Apple Teardown results and commentary.

        • http://www.laugh-eat.com/ kyron

          can i buy it? if yes, then it’s a product. we can say it’s still beta (how long was gmail beta?), but at the end of the day, it’s a product. even if a crummy one that they arent putting much wood behind.

  • GFYantiapplezealots

    HAHAHAHAHAHAH ……. 1 hr later …….

    OMG Google sheep are pathetic.

  • lucascott

    They are trying to copy the Apple Tax?

    I fear I am going to invoke some of the same defenses that folks use about said alleged tax. There are more costs to this than materials. Access to SDKs etc for example. $1500 is still perhaps high but not as insane as it seems

  • The White Tiger

    Even if that number is accurate (which Google has adamantly denied– greet that with skepticism or not), this is a market economy. You can charge whatever you want for a product you make, and if people are willing to buy it at that price, hey, more power to you. I’ve never begrudged Apple for any markups they do for their products– why should I chide Google?

    Though, really, it’s clear Google doesn’t see this as the final price range of Glass, should it ever be marketed to the mainstream. So who cares?

  • http://www.thegraphicmac.com/ JimD

    I guess Google (and Apple) are supposed to eat the R&D costs of their products and services. They really shouldn’t be paying all those engineers unless the results are the direct sale of a product/service.

    • http://www.laugh-eat.com/ kyron

      can you please link us to an apple BOM that has a remotely similar amount of markup?

      everybody has R&D.

  • http://www.johncblandii.com John C. Bland II

    Perfectly illustrates the expectation for them to be reasonably priced. The $1500 is to only let those in who really want in the Explorer program.

  • Paul Chernoff

    So I can build one of these for myself for under $100?