Nexus 7 buyers who opt for the 16GB model are paying a premium for all that storage.
IHS iSuppli, a hardware research and market analysis firm, performed a cost breakdown of the components inside the Google Nexus 7.
According to their analysis, the entry-level Nexus 7 has a $151.75 bill of materials (BOM) and costs $7.50 to manufacture. The unit's IPS display and touchscreen are the Nexus 7's most expensive components at $38 and $24, respectively. Other big-ticket items include the Nvidia Tegra 3 processor at $21 and the battery at $12.75.
Then there's the memory. According to IHS iSuppli, the base-model Nexus 7's 1GB of RAM and 8GB of flash memory cost just $13.50. The top-end Nexus 7's 1GB of RAM and 16GB of flash memory cost $21. Therefore, the extra 8GB of storage is worth $7.50.
Given that buyers pay an additional $50 for the 16GB Nexus 7, Google earns a $42.50 premium on the additional storage.
Of course, Google isn't the only company to use extra storage capacity as a way to boost their bottom line. A similar analysis of the 2012 iPad revealed that Apple charges and even higher premium for its high-end tablets.
Bill Detwiler has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Bill Detwiler is Managing Editor Tech Pro Research and the host of Cracking Open, CNET and TechRepublic's popular online show. He was most recently Managing Editor for TechRepublic Pro. Prior to joining TechRepublic in 2000, Bill was an IT manager, database administrator, and desktop support specialist in the social research and energy industries. He has bachelor's and master's degrees from the University of Louisville, where he has also lectured on computer crime and crime prevention.