Cost to make Google Glass? Just $152.47, according to IHS
FORTUNE — Google Glass fetched $1,500 when it was sold during a one-day promotion last month, but according to one research firm, the device’s hardware and manufacturing costs totaled just $152.47.
Research firm IHS Technology on Tuesday estimated the materials for Google Inc.’s (GOOG) eyewear cost just $132.47, while manufacturing costs were estimated to total about $20. Smart glass products like Google Glass are wearable computers with a head-mounted display.
Though those estimates suggest Google Glass commands a roughly 90% profit margin, IHS cautions that is likely not the case.
“The vast majority of its cost is tied up in non-material costs that include non-recurring engineering expenses, extensive software and platform development, as well as tooling costs and other upfront outlays,” said IHS senior director Andrew Rassweiler.
Rassweiler said the Google Glass IHS evaluated “feels like a prototype,” saying if the company were to aim for mass market production, future product revisions would likely improve processing speed, energy efficiency, weight, and size.
Google Glass went on sale for one day last month, and promptly sold out. IHS last month estimated the total market for so-called smart glasses could total almost 10 million units from 2012 to 2016, with shipments expected to reach as high as 6.6 million units in 2016. To reach that target, IHS said developers would need to successfully produce augmented reality applications that would justify user interest in smart glasses.
However, under a more pessimistic scenario, IHS said smart glass shipments could total just 1 million through 2016. That bearish scenario would likely play out if smart glasses became more of a wearable camera than a true augmented reality system, according to IHS.