Google Pixel XL manufacturing cost on par with that of iPhone 7 Plus, Galaxy S7 edge

The manufacturing cost of the Google Pixel XL is on par with that of the iPhone 7 Plus and Samsung Galaxy S7 edge, according to UK-based research company IHS Markit, which is not all that surprising. From the get go, Google priced the Pixel to directly compete with the iPhone and high-end Android flagships, ditching the somewhat mid-range pricing model it employed for Nexus devices.

According to a preliminary teardown estimate from IHS Markit, the bill of materials (BOM) cost for the 32 GB Pixel XL comes to $285.75. Since the 5.5-inch Pixel starts from $769, at first glance it may seem as though Google is pulling some $484 in clean profits from the phone. However, to its $285 BOM estimate, we have to add R&D costs, marketing costs, as well as various administrative expenses, in order to arrive at a Google's true profit from the Pixel XL. Despite the unknowns in the equation, IHS notes that the direct manufacturing cost-to-sales-price ratio of the phone is completely in line with those of direct competitors, such as the iPhone 7 Plus and the Galaxy S7 Edge.

Contrary to many preliminary predictions, the Pixel and Pixel XL, which are the first phones to carry the company's brand name, are rivaling high-end products by Google's own Android ecosystem partners. In that sense, the new Pixel lineup of smartphones is a departure from the Nexus brand, as Google is now employing a strategy of vertical integration of hardware and software, similarly to Apple.



1. Plasticsh1t

Posts: 3109; Member since: Sep 01, 2014

How come Chinese companies can sell their phones as low as possible? eli5 for me please.

4. Tyrion_Lannister unregistered

More hours, less wages, no need to import or export parts to other countries. I have seen the conditions these workers work in first-hand and how these companies work. Not to mention that Google has to pay a lot more to employees because most of them are in US. Average pay in US for a google employee is around 100k $ a year for an entry level programmer(109000$ to be exact) whereas in China it's not even 1/10th of that. So companies from China pay way less to their employees for about the same amount of work. You should read a bit about PPP(purchasing power parity) to get a good idea on how things work in 3rd world countries.

20. marorun

Posts: 5029; Member since: Mar 30, 2015

Tyrion is partially right. For the engineer and programmer. for the ppl building the phone nope ( they all asian in asian country using low wage. As for part same thing if the phone is build in asia all part are already there. So in a way he is right but still google and apple could sell the phone lower price and still rack a good profit.

32. Tyrion_Lannister unregistered

The cost going to the person making the phone is less than 10$ per phone.

34. marorun

Posts: 5029; Member since: Mar 30, 2015

More about 25$ so about 10% of the cost of part as manual labor.

23. yoghibawono

Posts: 240; Member since: May 04, 2016

Xiaomi for starter dont bother with retail store and marketting gimmicks. You only see them on tech sites, sold 90% online based on registration. Like one plus able to sell pretty cheap.

27. Wiencon

Posts: 2278; Member since: Aug 06, 2014

You're alive!

41. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

Chinese engineers, really? they reverse engineer other people's technologies and steal it. When that is ineffective, they spy and/or hack western servers. I'll give them credit for mass and assembling production. Even their steel have proven to be inferior to Western standards.

6. Carl3000

Posts: 240; Member since: Oct 11, 2014

They don't pay their workers high wages, if anything at all. Imagine if Xaiomi were manufactured in Chicago where the minimum wage is 10.50/hr. They'd have to pay higher wages, give medical benefits, provide safe work environments, etc. That's on top on the ridiculous US taxes they'd have to pay too. That would cost a s**tton more and their phones would be priced just as high as Samsung/Apple/Google to make up for it.

14. TerryTerius unregistered

Heh. Apple and Google paying taxes. I love your sense of humor.

15. Carl3000

Posts: 240; Member since: Oct 11, 2014

They do pay taxes, just no where near the amount they should be paying. They fund the presidential campaigns man what do you expect? Corpcrocracy!

21. marorun

Posts: 5029; Member since: Mar 30, 2015

Where those phone are built? ( not designed ) so you are half right.

8. ebilcake

Posts: 1231; Member since: Jul 16, 2016

Thin margins mostly. I don't buy the salary difference, most of these Chinese phones are from fairly large companies that employ and have offices from all over the world. if Google/Apple choose to overpay their staff then that's their choice, that cost should not be passed onto consumers. Import/export costs will be a similar story for all of them, working conditions regarding the the manufacture of all major phones on the market are questionable,

13. TerryTerius unregistered

Did you just basically make the argument that paying workers decent wages is stupid for companies to do? Or am I misreading your comment. Or to be more specific, how exactly are you defining "overpaying" their workers?

17. Carl3000

Posts: 240; Member since: Oct 11, 2014

Yes in fact he just made that argument but I think it's because he doesn't really know many asians practically slave in those manufacturers factories making just pennies on the dollar.

24. marorun

Posts: 5029; Member since: Mar 30, 2015

You dont know all phone OEM manufacture all phone in those factories? Only engineer , programmer and some other work from USA or korea on those OEM. its also there choice to pay them 100k+ a year if all the industry would lower those engineer and dev pay to 60k a year we would have lower price on device as well.

26. ebilcake

Posts: 1231; Member since: Jul 16, 2016

If Google want to pay above market average (or overpay if you like :p) then that's a great thing for the their staff, but they should not be passing this onto customers in terms of higher prices. Interpret that anyway you want, I don't really care.

35. marorun

Posts: 5029; Member since: Mar 30, 2015

Agreed they should not but all corp are greedy so..

38. NarutoKage14

Posts: 1348; Member since: Aug 31, 2016

Companies are free to charge any price for their good or services. We are free to choose to pay their price or go to a cheaper competitor. We vote with our wallets here.

37. NarutoKage14

Posts: 1348; Member since: Aug 31, 2016

Executives are overpaid. That's a fact. Some make millions a year and some make millions a month. Regular engineers/devs are not overpaid.

28. Clars123

Posts: 1079; Member since: Mar 16, 2015

also need to reference how due to the cheap prices they sell in large quantities very quickly

29. sissy246

Posts: 7129; Member since: Mar 04, 2015

$769 is not cheap.

2. dazed1

Posts: 808; Member since: Jul 28, 2015

Lies, Pixel is made from old junk leftovers from HTC, that crap BS wont work for users who use their brains and are well informed. Just take a look at S7 Edge or 7+ and then look at this, you will get the idea what is what.

11. Bankz

Posts: 2550; Member since: Apr 08, 2016

Actually the regular pixel is quite more attractive than the regular galaxy s7

22. ebilcake

Posts: 1231; Member since: Jul 16, 2016

How so? The Pixel is more expensive, the display is clearly not as good, no waterproofing, no wireless charging, worse battery life and no sdcard slot. I'm struggling that to see what's so attractive about the pixel

25. marorun

Posts: 5029; Member since: Mar 30, 2015

Samsung fanboy much. Samsung S7 is 370$ cad and pixel/iPhone 7 is 400$ cad in canada so much expensive.. The display is better than iPhone 7 but a bit worst than S7. Waterproofing? you mean thats crap thats make phone overheat and if you get water damage is not cover by warranty? Worse battery life? depend what you do overall its better than S7 and a bit worst than S7 edge. Wireless charging is a gimmick for now. SD card slot versus unlimited cloud storage is a question of taste. You are struggling to see because your head is in Sammy ***

36. ebilcake

Posts: 1231; Member since: Jul 16, 2016

I use a OnePlus 3 so I'm just a neutral actually. I go where the value is and between the Pixel and Galaxy S7 it's pretty clear the Galaxy S7 offers more. Why do you even bother? We know you're a Samsung hater. Whats the iPhone got to do with this? You know you're talking a load of crap as per usual right? :-)

30. sissy246

Posts: 7129; Member since: Mar 04, 2015

LOL not

3. Tyrion_Lannister unregistered

The BOM is that high because google is not making any component in-house. For example, a 1440p super AMOLED screen costs way more to Google than to Samsung because Samsung makes it in-house but google has to purchase from Samsung. S7 edge is clearly a more advanced phone when you take into account only the hardware. It has waterproofing, a more advanced screen, clearly superior processor( E8890), waterproofing, a much less blunt design and in general more expensive to produce. I'm not a Samsung fanboy here, just pointing out that google isn't doing anything special on pixel phones from hardware standpoint. They are doing what they do best, which is the software.

9. Napalm_3nema

Posts: 2236; Member since: Jun 14, 2013

Don't forget that they also don't have the sheer volume that Samsung and Apple have, which also drives up component costs. Using readily available commercial hardware, which is solely what is inside the Pixels, but purchased in low numbers, is more costly.

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