Google Inc. (NASDAQ: GOOG) has offered its Glass product for $1,500. The supply sold out quickly. Even at that retail price, the futurist “wearable” product has created such excitement that Google may not be able to meet demand for months. Google’s margin on Glass turns out to be huge, another reason for the search company to ramp up production.
According to tech site Teardown, the cost of the materials in the Google Glass 16GB model is only $79.78.
The cost to build Glass includes $2.15 to test and assemble. The cost of the battery is $1.14. The largest single cost is the processor at $13.96.
Google’s program to continue to drive demand, even without supply, is to get people to sign up from Glass-when it is available. People can sign up, and “wait in line” to get the product when it is out again:
We’re out of spots in the Explorer Program for now, but may have more to share soon. Sign up below to stay updated.
To discover new places, sometimes we need to leave the map behind. And that’s what Glass Explorers do. They are the first to make, to tinker, to create, to shape, and to share through Glass. We’re expanding little by little, and experimenting with different ways of bringing new Explorers into the program.
To spur demand, Google presents Glass as the Holy Grail of wearable products, with features which include software for runners and golfers, navigation maps, help with workouts, and ways to communicate with friends. It is nearly as smart as a smartphone. Google will undoubtably add features which will get it close and closer to a smartphone replacement
In the meantime, Google will need to settle for the fact that Glass sports a gross margin which is nothing short of extraordinary. Although it is not an exact comparison, Apple Inc.’s (NASDAQ: AAPL) gross margins are 39% in a good quarter. No one would argue that the iPhone or iPad costs anywhere near as little as Google Glass when it comes to the price to build them versus what Apple can sell them for.
Aside from extraordinary demand, in Glass, Google may have created one of the most profitable consumers electronics products in the world.