Google Glass Costs Just $79 To Produce, Military Applications

Google Glass, the controversial spy camera computer attached to a select group of wanna-be tech cool heads, costs the oh so tech sheik $1,500. This might not be the best value investment because the glasses cost just $79.78 in parts.

Google Glass Cost

A recent study by Teardown.com shows the most expensive part in the glasses is a computer processor available from Texas Instruments Incorporated (NASDAQ:TXN) that costs $13.96.  The miniature battery has a small price as well, costing just $1.14, while the display and touchscreen only costs $3.00.  Assembly and testing by real humans in some far away land that really benefits from free trade agreements through low cost wages only contributes $2.15 to the price, according to the cost study.  The study doesn’t factor in research and development and shipping, just the raw cost of materials and direct labor.

Google Glass Costs Just $79 To Produce, Military Applications

 

Pre-release marketing plan attempts to make Google Glass cool

The retail cost, on the other hand, is more a function of marketing and free enterprise.  The $1,500 cost is supported by a canny if perhaps a little too public media campaign to be seen as the “must have” cool item.  Before the launch, the glasses were donned on financial news programs by the hosts while over thousands of the cool kids had the glasses to walk into bars and test market the product in real life situations.

Woman gets in fight over wearing Google Glass

Those real life situations included a woman wearing the glasses getting into a bar fight, as patrons were viscerally disgusted, as reported in ValueWalk.  Having their actions in a bar recorded on video at the same time the woman could surf Facebook and make comments on an old boyfriend’s status just doesn’t seem right.

The invasion of privacy and general weirdness led to municipalities in the bay area writing laws limiting the use of Google Glass.  Maybe the woman in the bar fight should have worn Google contact lenses, a project they announced in January.  Too late to avoid the bar fight, I’m afraid. But despite it all, Google was able to preserver and accomplish something rare.

Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) was going down the road of famous fashion designers such as Michael Kors, Prada and Versace. Produce a product that literally costs next to nothing and mark it up to achieve gigantic sized profits on the backs of the cool-seeking, image conscious public.

The $1,500 price tag for Google Glass is just the starter model, however.  If you add accessory frames or prescription glasses the tab could go higher.

The real Google target market that isn’t discussed

While the consumer market could be a significant aide to Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s bottom line, the real target market could be military and government applications.  What isn’t much discussed about Google is how they are building a growing portfolio of companies that could sell “high value” products (at a high profit) to the US government.  (We discussed this for the first time in ValueWalk here.)

Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s portfolio includes robot manufactures with government contracts, a solar powered drone manufacturer, cars that drive themselves, Google Glass and a host of other computer-based tools to conduct warfare and control a population.  Connect the dots on these companies and you realize Google isn’t just a play on advertising revenue.  This is a company that could fit right into the military industrial club – which is really the sweet spot of profit generation.

And what advantage does Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) have in regards to the dinosaur firms such as The Boeing Company (NYSE:BA)?  The government uses Google to spy on the world.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com