Interesting that they were using PIC32MZ EC in the design, 18k units for grabs (brave indeed considering the silicon bugs on the EC devices and the current half finished Microchip Harmony software framework).
They also had their own mass production programmer to program those chips direct from off the reel. Maybe those programmers are cheaper than I'd expect, but that's exactly the kind of thing you'd want to farm out rather than do it yourself. At that volume you'd be getting them programmed for pennies a unit from a third party.
Rather more startling are the 4,500 Lantronix xPico Wifi AP and server interfaces, a remarkable choice (not in a good way) considering the retail price of the Zano, my estimate would be they'd be paying $20/unit at that volume. Those things are priced for small runs, certainly <1ku, where it's not worth the effort of getting the stack working yourself... or maybe they were a victim of Microchip's half built Harmony framework.
Disregarding the high price of the Wifi modules, technically Lantronix as a solution has never been great if you're after sustained high bandwidth such as that required full HD or even standard def video, it's difficult to see how this would ever fly in the way they advertised (pun intended). They might support 802.11 b/g/n but you're lucky to get much more than 10 Mbps out of them on a good day without the vagaries of multipath and the inevitable retries on a continually moving link.
From what I've read of the article/report, it does seem like the main protagonist lives inside some kind of self-perpetuating bubble of bullshit of his own making.
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