The manufacturing cost of Google Pixel XL comes at around $285.75, although Google sells it for $769.99. According to IHS Markit, this is a logical and expected move since the Pixel XL targets the same class of high-end premium users. These customers usually depend upon Apple and Samsung if Pixel XL doesn’t exist.
Based on studies and teardown conducted by IHS Markit, the bill of materials (BOM) cost for the new 5.5-inch Google Pixel XL phone with 32GB of internal storage comes to $278. If you include $7.75 in basic manufacturing costs, the total cost to manufacture the Google Pixel XL amounts to $285.75.
According to IHS Markit, the direct manufacturing cost-to-sales price ratio is in line with those of direct competitors in the smartphone market, which includes the iPhone 7 Plus and the Samsung Galaxy S7 Edge.
Commenting on the development, Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit disclosed that total BOM costs for Google Pixel XL are, not surprisingly, in line with those of other competitors. This is because the supply base and specs are very similar from phone to phone.
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, said Rassweiler. He is of the opinion that the Google Pixel will have an edge because of the discontinuation of the rival Samsung Galaxy Note 7.
Responding to media, Wayne Lam, principal analyst of smartphone electronics for IHS Markit revealed that eight years after the launch of the first version of Android, and with Apple iOS and Google Android settled as the dominant platforms, Google has “tripled down” on Android by vertically integrating its smartphone design.
Pixel is a big refresh from the Nexus series of the smartphone since the search engine giant has taken over all aspects of the hardware design and software integration.
According to IHS Markit, the vertical integration of hardware and software is a product strategy taken straight out of Apple’s playbook. Moreover, Google is touting to compete with the likes of LG, Samsung, and Xiaomi in a bid to capture the smartphone market.