Google's $199 Nexus 7 tablet arrives in the next week or so, and we've previously reported that Google and ASUS were selling them for around cost price, $199. But, research firm UBM TechInsights believes that it costs Google $184 per Nexus 7 tablet to be manufactured, leaving $15 in profits.
Compared to Amazon where they make around $46 per Kindle Fire sold, and Apple make around $170 for each and every iPad sold. So the question asked is why would Google even bother with making a tablet if there's hardly any profit margin?
Well, first off, it gets their tablet into more hands than if it were more expensive, and Google getting their Nexus 7 into as many hands as possible is good for generating revenue elsewhere. From their Google Play store, the use of Gmail, Maps, YouTube and more.