TECH

Google Glass Only Costs $150 To Make, But $1,500 To Buy: Report

05/14/2014 11:47 am ET | Updated May 14, 2014
ASSOCIATED PRESS

Wednesday is the first day that any American with $1,500 burning a hole in their pocket can buy Google Glass, Google announced Tuesday in a Google+ post.

There are a lot of reasons not to buy Google Glass. It's super weird looking. It might get stolen off your face. People might think you're a creep. But more than anything else ... it's a huge waste of money.

Want proof? According to the global information company IHS, which frequently does "teardowns" of products to see how much they cost, the manufacturing and hardware cost for each Google Glass comes out to only $152.47. That means that if you believe the IHS teardown -- which Google disputes, obviously -- you're shelling out 10 times what it costs Google to make Glass.

According to Teardown.com, a site by consulting firm Tech Insights that also does teardowns, it's even cheaper to make Glass than IHS estimates. The site broke down Google Glass and did its own estimation earlier this year, and calculated it cost just $79.98 to make each pair.

But even if the parts are relatively cheap, it's important to remember there are costs associated with Glass that aren't just the pure hardware. Google spends a tremendous amount of money each year in its closely guarded lab, Google X, on developing new gizmos like driverless cars and Glass.

In an interview with Re/code on the new IHS report, IHS analyst Andrew Rassweiler explained: "My point is: Google spent a lot of money on this project,” Rassweiler said. “I don’t think this should be interpreted as Google gouging the customer. Costs are difficult to assess with the production being so limited."

"While we appreciate another attempt to estimate the cost of Glass, this latest one from IHS, like Teardown.com's, is wildly off," a Google spokesman told The Huffington Post. "Glass costs significantly more to produce."

Google gave the same comment to the WSJ.

Even if you drop $1,500 on Google Glass (again, don't) and rationalize it as paying for all of the research and engineering that went into the product, you're still going to pay a markup that's significantly higher than the ones for other top-tier tech items. For example, according to another IHS teardown, a 16 GB iPhone 5S costs Apple about $191 to build. That phone will cost you $199 to buy with a contract, or $649 without one. Expensive, sure, but not 10 times the price of the materials.

Maybe Google will drop the price eventually. Forbes contributor Mark Rogowsky writes that he thinks Google Glass will be cheaper when Google decides to make it more widely available. The $1500 cost "is designed to keep demand low so Google can deal with relatively small numbers of customers, taking their feedback and working on improving Glass," according to Rogowsky. Indeed, back in 2012, when Glass was just a rumor, several Google employees estimated the cost would be "around the price of current smartphones," or $250 to $600, The New York Times reported.

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