This post has two articles that describe the launch of the new “Google Glass” product. Read the articles carefully and describe what Google has done so far to develop this product and understand the market for it.
The second article says that an independent company estimates that it only costs Google $152.47 in parts and manufacturing for each pair of glasses. Google argues that this cost is low relative to the real cost of producing the product. What do you think about the attractiveness of the product from a profitability view? What if the real cost were 2X, 3X or even 4X the cost estimated by the independent company?
Google indicates that they will sell the product for “as long as we have it on hand.” What should their long term strategy be for producing this product in the future. Develop a plan for how Google should proceed with this product.
WSJ – May 13, 2014, 8:10 PM ET
Google Glass Is on Sale for Anyone in the U.S. (Again)
- Google Glass prescription frames
- Associated Press
Google Glass can now be purchased by anyone in the U.S. willing to fork out $1,500. But it’s not clear for exactly how long.
The company has had a restricted beta test of the device, as well as an open one-day Glass sale last month. On Tuesday, Google said it will sell the device more broadly, but only while supplies last.
“We learned a lot when we opened our site a few weeks ago,” Google said in a post to the Glass page on Google+. “So we’ve decided to move to a more open beta.”
Glass isn’t yet a fully finished consumer product. Google is only offering an early version targeted at beta testers called Explorers.
The company said it’s still working to improve Glass on both the hardware and software fronts, “but starting today anyone in the U.S. can buy the Glass Explorer Edition, as long as we have it on hand.”
It’s not clear how many of those units Google has made already, how quickly they might run out or whether it would make more in response to demand. But anyone who likes being an early adopter, and missed out on the one-day offer, has another chance.
Then again, Glass fanciers could also wait until after it leaves the current developmental stage, which may is likely to include consumer versions incorporated into frames sold by the likes of Oakley and Ray-Ban.
Google Glass Materials Cost $152, IHS Says
Firm Says Materials Are a Small Slice of Glass’s Price—but Much of Cost Can Come From Engineering and Development
By Ben Fox Rubin
WSJ – Updated May 13, 2014 12:06 p.m. ET
Dutch Prince Pieter Christiaan wears Google Glass during a walking tour in the Netherlands on April 26. European Pressphoto Agency
IHS Inc. this week came out with a new product teardown of Google Glass, saying the digital headset’s hardware and manufacturing expenses total about $152.47—a small slice of the product’s $1,500 price tag.
Still, IHS notes that these teardown estimates can be misleading, since the majority of the costs associated with many electronic devices—particularly Glass—can come from nonmaterial expenses, such as engineering costs, software development and tooling costs.
“When you buy Google Glass for $1,500, you are getting far, far more than just $152.47 in parts and manufacturing,” said Andrew Rassweiler, an IHS senior director.
Google disagreed with IHS’s take on the cost.
“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 said. “Glass costs significantly more to produce.”
In late April, TechInsights’s Teardown.com placed its cost estimate for Glass at an even lower $79.78.
For its part, Google in April also called Teardown.com’s estimate “absolutely wrong.” A Google representative wasn’t immediately available Tuesday for comment on IHS’s estimate.
Google hopes to cut the cost of Glass, especially when the device is released for sale to the general public. Higher production volumes will likely help reduce component costs.
Glass has only been made available once to the entire American public—on April 15 of this year at the full price of $1,500. The product is otherwise available on an invitational basis.
IHS and Teardown.com both mentioned that Texas Instruments Inc. components are a major part of the Glass design. IHS said the semiconductor supplier contributed the apps processor, power management IC, audio codec, battery fuel gauge and regulator ICs, accounting for an estimated $37.90 worth of components identified so far in the product.
Write to Ben Fox Rubin at email@example.com