Google’s Pixel margins are a lot like Apple and the iPhone’s

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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.

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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.

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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.

Source: Bloomberg


About the Author: Justin Herrick

Born and raised in New Jersey, Justin is a graduate of Fairleigh Dickinson University where he studied marketing with a focus on digital marketing. He's very talkative and enjoys discussing anything from technology and sports to video games and television. As for Justin's current device rotation, he carries around the Google Pixel and Nexus 9. In the rare case that his phone or tablet is not in his hand, he is either flicking through cards on his Moto 360 (2015) or typing away on the Microsoft Surface Book. Justin is patiently waiting for the day that Google replicates the Galaxy Nexus with modern day specifications.


  • Richard Dennis

    Being that it has very little as far as specs are concerned over the 6P but 300 bucks more expensive i would say the Pixel if it sells well will be an incredible windfall for Google. But i would argue if they are going to charge top shelf prices they need to have the latest and greatest, aside from the newest OS pixel is very marginally better than 6P. Cost vs Value.. Its a loser. (In my opinion)

  • PD

    This just makes me even more disappointed. Knowing I paid $600 for a my Nexus 6 which is still a great phone, I see no reason to buy this phone yet. I’ll wait till I need a new one then grab a 6p. This phone is a pass. I’d even buy a lgv20 over it. The price is just way to much.

  • Darkcobalt

    My personal opinion is that there’s a bit of a disconnect between the price margins and Google’s current position in the marketplace. Apple commands a premium because it has built a brand and controls an entire OS and walled garden ecosystem that people are partly locked into for various reasons. An iPhone user, given the choice between a similarly priced Pixel and iPhone 7 will just opt to get an iPhone 7. An Android user, given a choice between Pixel and other Android devices might opt to get those other devices.

    Android is a fantastic platform, but its’ openness also means that 3rd party manufacturers will make it hard for Google to sell many Pixel units unless it starts to do exclusive software on the Pixel, which defeats the purpose of an open and available platform like Android.

    • Zoidbort

      Precisely.
      Google is showing it’s Apple colours with this latest phone IMO.
      The price is totally perplexing ($1100 here in Canada for the XL?!) and it will fail in selling many of these due to the said price.
      Nexus was supposedly meant for the “developer” but really most people who bought it did so to have a vanilla OS that received updates the quickest way possible, not to ‘develop’ or tinker, anyone can do that with rooting and roms.
      Now the Pixel has launched with it being meant for the vanilla android “consumer” but really that was their Nexus following who bought them for their cheaper price and higher end value.
      They have pushed out their very niche they wanted to attain, they were there all along but they just didn’t see it.

  • Droosh

    Your last sentence is confusing. Are you saying that since Google/HTC can’t order the parts in as much volume as Apple, that Apple’s margins actually increase over Google’s and that this study doesn’t factor in volume pricing?

    • Justin_Herrick

      Google can’t buy as many components as Apple because it knows it’s not going to sell Pixels on an iPhone level.

      • UralBas

        Well they are sold out and out of stock for over a month. So they are selling more than expected.

        Google s problem is that they patterned with Verizon a company in decline. They should have worked with all telcos and left their options open and would have made a killing.

        Verizon makes the Pixel a no go for me.