Pixel vs iPhone: Hardware maths equals as well

Nov 23, 2016 12:31 PM IST

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New Delhi Google’s Pixel series of phones is competing with Apple not only in terms product specifications, but in terms of hardware costs as well.

According to London-based market research agency IHS, Apple spends around $224.80 for manufacturing an iPhone 7, 32 GB; For Google, the figure is around $285.75. This means that Apple, which sells the 32GB variant for $649, has a margin of $424.2. Google, on the other hand, which sells the larger-sized Pixel XL at a staring price of $769, has a margin of $483.25. These do not include marketing costs.

“Total BOM (bill of materials) costs for the Google Pixel XL are in line with those of other competitors, because the supply base and specifications are very similar from phone to phone—whether it’s an iPhone, a Galaxy-series phone or the Google Pixel XL,” said Andrew Rassweiler, senior director, cost benchmarking services, IHS Markit. “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, which directly compete with these products.”

“The Google Pixel could also have an advantage for now over Samsung, since the latter has withdrawn the Galaxy Note 7 series completely from the market,” he added.

Google Pixel series is actually a success story for the internet giant, analysts said.

“In terms of hardware profitability and customer satisfaction in the Android ecosystem, the Pixel is a great success. It directly competes with players like Apple and Samsung,” said Vishal Tripathi, research director at Gartner. “The margin on the phone is high even after taking into account other cost factors.”

According to Tarun Pathak, a senior analyst at Counterpoint Research, Taiwanese handset maker HTC is also responsible for the success of Google’s Pixel’s series of phones. “Google’s decision to partner with HTC was a great move. HTC has the expertise to create a phone, which not only generates value for consumers, but results in high margins for the company as well.”