Are consumers spending too much on Google Glass?
The cost to produce a Google Glass unit is about 10 per cent of its $1,500 price tag, according to a teardown by IHS Technology. The question now is: Could Google be pocketing a fat margin on each Glass sale?
"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," said Andrew Rassweiler, senior director, cost benchmarking services for IHS.
Whereas IHS has observed this trend in other electronic devices, it 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," said Rassweiler.
The most expensive components of the device are: the frame at $22 or 17 per cent of the BOM, and the (LCOS) projector display at $20 or 15 per cent of the BOM.
Google Glass is not yet generally available through retail, the thousands of units in the hands of users notwithstanding. The pre-mass-market status of Google Glass is evident by examining its design.
"Today's Google Glass feels like a prototype," Rassweiler said. "The design employs many off-the-shelf components that could be further optimised. If a mass market for the product is established, chip makers 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."
Most of the ICs in the head-mounted computer are mature when compared with recent flagship smartphone designs. For example, the Texas Instrument OMAP4430 apps processor used in Google Glass is made with 45nm semiconductor manufacturing technology—two generations behind the 28nm chips employed in the latest flagship smartphones.
The use of more cutting-edge ICs could yield future Google Glass products that are smaller, lighter, more energy-efficient and less costly to produce than the current model.
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