Google Glass goes beta today

TheForce

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Want to be a beta tester for Google Glass? If you have $1500 you can buy your way into the program.

Google Glass is expected to be on sale for general retail later this year.

Google announced it still has a number of bugs to work out but is now ready for beta testing.
 

TheForce

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Last hardware beta I did was a SCSI hard drive controller (I'm dating myself) and they sent me the card for free! But I had to send it back when the program terminated.

Scott- do you recall back at CES all the Google employees walking the show floor wearing various designs of Google Glass? They were told to parade the product to build that cool factor. :)

PS- You forgot my birthday this year. :(
 

TheForce

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$150 is not the cost of the product. It is just the cost of the inventory to make one unit of the product. The actual cost is inventory ($150) + amortized R&D + marketing + mfg labor + 263A costs. Add all that up and you may realize a true cost per unit of over $500 for the first 100,000 units or whatever Google decides to amortize the R&D over. Then beyond that, there will be bug fix costs and upgrades that replace the amortized R&D. So, assuming they can wholesale the product for $800 making a profit of $300 per unit, it could then retail offering the retailer $700 to cover his profit and costs. Once competitors enter the game, Google will lose it's lead and need to cut pricing unless the demand for the original remains high due to it being superior. It;s why Apple products often maintain a high margin while Samsung stuff has very low margins. To compete, Samsung plays a price game. Apple stays with the idea their product is superior and commands the price. Time will tell if Google can play the Apple game of premium price for highest quality and still sell the numbers.
 

Ilya

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I agree with Don, for a product like this, the software and R&D costs should significantly outweigh the hardware costs.

Still, to me the $1500 price tag looks outrageous! They probably have a very limited supply at the moment and are just trying to control the demand by setting the price so high. I can't imagine it staying that high for too long though.
 

John Kotches

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Don:

It frustrates me to see so few people understanding that the parts cost is only a portion of the final delivered price.

In the case of Google Glass there isn't a retail middle man so there is a lot of markup in the product. The only reason I can see that Glass is priced so high vs cost of parts is that they are offering the equivalent of a public beta with the Explorer program.

With consumer electronics it is typical to see 5:1 ratios between wholesale price and parts costs with 8:1 to 10:1 common ratios at retail depending on volume of sales.

While that seems like a lot, that ratio has to cover all of the costs that you mentioned that few want to acknowledge.

I see products like the newer Motorola phones selling more direct to consumers as potentially disruptive to the smartphone market. Bypassing the cell provider leads to lower prices for the consumer. Of course we (consumers) have to pay the full price upfront and it is a different way of thinking about our cell phones.

I am hoping it provides some downward pressure on cell plans... Where once again Americans pay more for less.

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mike123abc

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$150 is not the cost of the product. It is just the cost of the inventory to make one unit of the product. The actual cost is inventory ($150) + amortized R&D + marketing + mfg labor + 263A costs. Add all that up and you may realize a true cost per unit of over $500 for the first 100,000 units or whatever Google decides to amortize the R&D over. Then beyond that, there will be bug fix costs and upgrades that replace the amortized R&D. So, assuming they can wholesale the product for $800 making a profit of $300 per unit, it could then retail offering the retailer $700 to cover his profit and costs. Once competitors enter the game, Google will lose it's lead and need to cut pricing unless the demand for the original remains high due to it being superior. It;s why Apple products often maintain a high margin while Samsung stuff has very low margins. To compete, Samsung plays a price game. Apple stays with the idea their product is superior and commands the price. Time will tell if Google can play the Apple game of premium price for highest quality and still sell the numbers.

With a traditional company that would be true, but this is Google.

My point was that they were selling for $1500, which I do not think will be a price they will be able to mass market with. At 150 component cost Google will be able to reduce the retail price a lot and still be able to cover their costs. Google is not the same business model as Apple. Google barely marked up their phone hardware. In fact they want to be more like a game console manufacturer, they want to barely break even on the hardware. Google makes their money on the back end with advertising and other sales. I could see Google launching this at $199 or even less if they have figured out how to monetize the after market with sales of apps and advertising.

Just look at how much stuff Google gives away for free all sorts of programs, and apps, just to get the opportunity to sell ads.

I see the $1500 cost now as the cost of being a developer. These users are supposed to be developing uses to make the glasses a needed product that consumers will desire, and Google will be able to advertise on...
 

John Kotches

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Mike123:

I could see glass having a GA (Generally Available) price of $500-600 assuming they continue with direct sales.

Early adopters always pay a premium price for their product.






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TheForce

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John, Mike- While I agree that Google is mostly focused on the ad end of their business model and have failed to monetize many other ventures, these other products don't seem to have staying power either. Google Glass will be like buying a Nexus phone. Here today, gone tomorrow. But I agree the development will get it off the ground in that product design. And, I also agree that if they can monetize the GUI with their core money maker, advertising, then they can consider it a winner. Once the basic design and interface is debugged, look to Samsung for the cheap product that most will afford. Then, Glass will quietly disappear just like the Nexus.

As far as pricing for the retail market. I learned this with my own products I sold through Dive stores. If you expect to have a retail store outlet, you need to be able to sell your products so you make a profit and still wholesale it to the retailer so he can mark it up 100%. Then if you sell to the general public at the same markup or sale price, you won't get any stores to buy your products wholesale. Never discount as a manufacturer. In fact, I sold a few of my products direct for more than the stores were selling just to keep the buyers at the stores happy.

Yes, Google is not Apple. I own stock in both but I trade Google and maintain no core position. Google's stock price hardly moves with news like Glass or any other product announcement. It moves solely on earnings. Apple on the other hand, has wide swings on the rumors of new products, then a few weeks of sales the stock moves again. News of dividend, buybacks and now a 7 for one split, also moves the stock. The reason why is everything Apple does generates good margins and unless it is cannibalized by one of their other products, it continues to earn nice revenues generation after generation. For the past 2 years Apple has been growth stunted by two problems. 1. They do not manage their cash pile to satisfy investors. We want to see more R&D and M&A. 2. Tom Cook has yet to introduce a product post Steve Jobs that is as successful as the iPAD or iPhone. Or, a service as successful as iTunes.
 

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