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Google’s Nexus 7 appears to be on a direct collision course with’s Kindle Fire as the two tech giants battle it out for second place in the expanding tablet market. In order to get a better look at the two devices, IHS iSuppli performed a physical teardown of the two devices, analyzing the cost of materials.

Interestingly, given the bill of materials (BOM) and manufacturing costs, it appears that will make more money on its current version of the Kindle Fire than Google will on the Nexus 7. (Amazon is reportedly in the process of developing a new version of the device).

The Kindle Fire’s component costs have dropped.

However, that only tells a part of the story, since the Nexus 7 boasts a more powerful processor, a better display and a camera. Those features add costs.

“The two platforms are similar in many regards, including the use of the 7-inch display, the eschewing of 4G wireless connections in favor of Wi-Fi, support for virtually identical battery lives and the same pricing for the entry-level models,” said Andrew Rassweiler, senior director of teardown services for IHS. “However, the Nexus 7 has superior specifications to the Kindle Fire, giving it a more attractive feature set that may make it more desirable to consumers.”

Interestingly, IHS iSuppli also now finds that the bill of materials for the Kindle Fire has dropped substantially from when it was released last fall. At that time, the research firm estimated that it cost $191.65 to make. Now, it estimates the cost of the device is $133.80.

The reduction in component pricing provides “a breather for Amazon in terms of the subsidy it initially paid to penetrate the market,” IHS iSuppli said.

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