The Pixel smartphone is rivalling the iPhone in terms of pricing, but Google is also going for Apple like profit margins according to reports by Bloomberg and CNET. The reports are based on findings of IHS Markit, a leading company dealing in analytics, expertise and information.
IHS Markit has found out the detailed bill of materials for the iPhone 7, and not yet the iPhone 7 Plus. The bill of materials for the Google Pixel XL is comparable to that of the iPhone 7 Plus or the Samsung Galaxy S7 Edge.
Exploded Apple iPhone 7 view. Source: IHS Markit.
Exploded Apple iPhone 7 view. Source: IHS Markit.
Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit says “Total BOM costs for the Google Pixel XL are, not surprisingly, in line with those of other competitors, because the supply base and specs are very similar from
phone to phone—whether it’s an iPhone, a Galaxy-series phone or the Google Pixel XL. The Pixel clearly targets the same top-end flagship space occupied by the Apple iPhone and top-end Samsung Galaxy lines, with retail pricing points that directly compete with these products”
Google Pixel XL exploded view. Image: IHS Markit.
Google Pixel XL exploded view. Image: IHS Markit.
Google is following Apple’s strategy of delivering the best possible user experience on the device by tightly integrating the software offerings with the hardware offerings. However, the pricing alienates Android purists who had adopted the Nexus line and its relatively cheaper devices.
The latest version of the Android operating system will only be available on Pixel phones and Nexus devices with continued support. With the Pixel, Google is taking on other manufacturers in the Android ecosystem directly as well.
A Samsung Galaxy S7 Edge.
The Samsung Galaxy S7 Edge.
Teardown costs do not accurately represent the actual cost of selling each device, as the cost for research and development, or marketing the product is not included in the breakdown of the bill of materials.
However, as 9to5Mac notes, the estimates are an important indicator of the profit margins per phone over and above the cost of research, development and marketing.