El Segundo, Calif. — Although Google Glass, which sells for $1,500, has hardware and manufacturing costs of only $152.47, according to a teardown by IHS Technology, it doesn’t translate into a “sky-high margin of 90 percent” for each sale, according to IHS analyst Andrew Rassweiler.
“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, 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.”
Here’s the breakdown: Google Glass has a BOM of $132.47 with a $20.00 manufacturing expense, which increases the cost to $152.47. The preliminary assessment accounts only for hardware and manufacturing costs and doesn’t include other expenses such as software, licensing, royalties or other expenditures.
Although the design uses many off-the-shelf components, Rassweiler noted that these components could be further optimized once it moves out of the pre-mass-market stage. “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.”
In addition, the design uses many mature ICs such as the Texas Instruments Inc. OMAP4430 apps processor made with 45-nanometer (nm) semiconductor manufacturing technology, which is two generations behind the 28nm chips used in the latest flagship smartphones, said Rassweiler. With newer generation ICs, it’s expected that Google Glass products will be smaller, lighter, cheaper, and more energy-efficient.
In addition to the apps processor, Texas Instruments also supplies the power management IC, audio codec, battery fuel gauge and regulator ICs. The teardown finds that TI accounts for an estimated $37.90 of components identified, representing 29 percent of the BOM.
One of the most expensive components in Google Glass and its most defining feature, said Rassweiler, is the head-mounted liquid-crystal on silicon (LCOS) projector display. IHS estimates the cost of the LCOS projection element made by Taiwan’s Himax Technologies Inc. at $20.00, accounting for 15 percent of the total BOM.
The Google Glass includes two accelerometers that are typically used to detect motion in electronic devices: one from STMicroelectronics and another from InvenSense Inc. “Given that smartphones generally incorporate just one multi-axis accelerometer, the use of two of these devices represents an interesting and unusual design choice that must be further investigated to be understood,” said Rassweiler.
The most expensive component is the frame of the Glass, costing $22.00 or 17 percent of the BOM. The teardown reveals that the frame is made of titanium, a durable and expensive material used in high-performance military aircraft and in some eyeglass frames. Titanium is rarely used in commercial electronic devices, according to Rassweiler.
“The frame is just one aspect of how Google is presenting Glass as a premium product,” Rassweiler added. “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.”