It looks like Teardown.com has touched a nerve with Google. The tech site dedicated to taking apart fancy technology hardware to calculate its true built cost deconstructed Google Glass, which is currently priced at $1,500, came up with a component value of just $80. A Google spokesperson snapped to the Wall Street Journal that the estimate is “absolutely wrong.”
Teardown priced Glass’ 16GB NAND Toshiba flash memory at $8.18. Its breakdown looks like a fairly routine and nerdy shopping list: processor, $13.96; camera, $5.66; battery, $1.14; and so on. If true, the early Glass sales went out at an 1,875 percent markup. Good business, huh? Apple eat your heart out at those hardware margins.
Admittedly, as Google asserts, this new breakdown might be wrong. But probably not that wrong. Last August, the Topology Research Institute priced out the Google Glass’ display component at $30-$35, which Teardown priced at $3. Topology said that the display was easily the most expensive part of Glass. A deconstruction of Glass by Extreme Tech that June concurred with this, stating that the tiny, millimeters wide 640×360 display was easily the only exciting part of the futuristic device. It found that for how futuristic that Glass looks, much of what it is comprised of is mundane hardware.
GigaOM found Glass to have many of the same parts as Motorola’s MotoActv smart watch which was released in 2012. Pricing those out and adding in $35 for the display and $40 for the speaker, its most generous estimate of Glass’ cost wholesale was $225. GigaOM’s estimate is three times higher than Teardown’s (it’s method was a lot less scientific), but even if spot on it would equate to a very healthy gross profit margin for Google (roughly 85 percent)
It is not much of a leap in logic, nor much of a hot conspiracy, to suggest that Google priced Glass unnaturally high to tamp down on interest and make sure that the early adopters had a financial stake in supporting the project. Glass’ marketing chief Ed Sanders told Forbes as much last month. “The high price point isn’t just about the cost of the device. We want people who are going to be passionate about it,” he said.
Setting a price that high is a textbook way to choke off demand. But Google’s self-selected Explorer program for Glass, followed up with its 24-hours only come-one-come-all sale kept this club exclusive enough anyway. There are other ways to meter access with out pricing it like you would a new refrigerator.
Given the frustrations directed at Google Glass since its launch, that high price is starting to look less like practical economics and more like a messaging mistake, one more thing to help deepen the Glasshole mythology. Google wants us to think that the resistance to Glass has been about standard for any new technology, but the legal, moral, and privacy concerns have been very real. A ponderous dos and don’t lists issued by Google for Glass hasn’t helped.
For some, Google Glass has become a symbol of tech industry ridiculousness. It is this decade’s version of the Segway. In San Francisco it has even gone past being seen as just a bit silly; in a city where the tech sector has become the whipping boy for annoyance at high rents, Google Glass has become a totem of class tension.
For any frustrated person, the price – that knowledge that Glass user X paid $1,500 for the privilege to look that ridiculous – has heightened this annoyance.
Yes, Glass has more problems than its price tag. But as it inches closer to commercial release, probably at a much more approachable retail price, it represents yet another piece of baggage Glass is saddled with upon (official) arrival.
Let’s just say, Glass has 99 other problems, but an artificially inflated price tag didn’t need to be one.
[illustration by Brad Jonas for Pando]