Update: the IHS report is available here.
Over the weekend, my colleague Nirave Gondhia wrote a feature exploring whether or not the Samsung Galaxy S6 and S6 Edge were overpriced, considering the increased price tags over their predecessors and how the handsets compare to other devices including Apple’s iPhone family. Curious as to how much the Galaxy S6 and S6 Edge really cost, as far as bill of materials is concerned? A new report from IHS helps shed some light on the matter.
Although the full report isn’t available just yet, Re/Code has highlighted some of the information from it, focusing specifically on the 64GB Samsung Galaxy S6 Edge. As it turns out, the cost to build the Galaxy S6 Edge 64GB model for use on the Verizon network comes to about $290, including parts and assembly. That’s about $34 higher than the 64GB Galaxy S5 cost.
Breaking things down a bit further, the most expensive component on the Galaxy S6 Edge is the curved display, which comes to roughly $85. Next up, is the Exynos 7 processor, at a cost of about $29.50. Continuing on, some of the other higher-cost items are the DDR4 memory at $27, and the Qualcomm baseband chip at $15.
Samsung pricing compared to Apple
To put things into perspective, let’s look at the Apple iPhone 6 and 6 Plus. The 64GB models of each of these devices are priced at $247 and $263 respectively, with retail pricing (from Big Red) set at $649.99 and $749.99. That’s a markup of roughly $403 for the 64GB iPhone 6 and $487 for the iPhone 6 Plus. Meanwhile, the Galaxy S6 Edge 64GB model is set at $699.99 through Verizon, a markup of nearly $410. As you can see, the markup for both Apple and Samsung products are actually rather similar.
As you can see, the markup for both Apple and Samsung products are actually rather similar. Before you start screaming “We are being ripped off”, let’s not forget that there’s much more involved than a simple breakdown of parts and assembly cost. There’s also packaging, advertising, research and development, and tons of other aspects that Samsung and Apple recoup by keeping that price tag as high as possible.
Could Samsung and Apple price more aggressively? Absolutely. But considering their reputation, they really have no real need to, as they have a highly established reputation and no shortage of consumers lining up to pick up what they have to offer.