The Nexus 7 is cheap, make no mistake about that, and what's on offer for that small amount of cash is a whole lot of tablet. But is Google making any sort of profit on it or maybe even a loss?
Much like over the pond with the Kindle Fire, Google is planning on selling the tablet with quite a thin margin, and will hopefully make up the extra costs through content. Sure, the tablet costs around £118 in pure components, but factoring all the logistics; handling, building and actually getting it to consumers, the costs surely creep up to that £160 mark for the 8GB model. The £200 16GB version on the other hand will probably give Google and Asus some sort of profit at least.
Of course, eventually the prices for components will drop further, and a little way down the road we can expect Google to be pulling a greater profit on the 8GB model. Those who haven't jumped onto the cloud storage bandwagon right now are more likely to grab the more expensive version, which is exactly how Google is going to make their money. That and flogging you crummy movies. [AndroidAuthority]