If the Pixel is a success, Google is going to make tons of money. An analysis firm looked into what the company is paying to create a single unit and discovered Apple-like margins.
The total cost of obtaining the materials for the bigger Pixel XL and assembling a final product, according to IHS, is $285.75 while show a $769 retail price at the Google Store, Verizon, and Best Buy. Google is thus pocketing more than $400 for every unit sold, which the analysis firm says is even better than the smaller iPhone 7 from Apple.
While Apple pays an estimated $19 for its camera setup, Google is spending $2.50 less with the results between the Pixel and iPhone being very similar. That’s just one example showing you how the Pixel’s margins are better than the iPhone’s.
It turns out Google is getting similar pricing for components and paying around the same amount most other companies in the mobile industry already do because of its prestige in the world and its partnership with HTC to develop the Pixel. And we should note HTC is really just the Google version of Foxconn for Apple. Google maintains control of everything from design to the supply chain. HTC merely assembles each Pixel.
Apple’s advantage, however, continues to be its ability to drive down prices by ordering a large quantity of components. iPhone sales are more of a surety than Pixel sales, so Google cannot place big orders as it runs the risk of its phone not selling and thus being left with unused pieces that lose value.