The Costs of Manufacturing the Google Pixel

(Image courtesy of IHS Markit.)

In the wake of Samsung’s battery catastrophe, many Android-loyalists are no doubt considering a switch to the new Google Pixel. Although its retail price may seem a bit steep, from a manufacturing point of view, Google’s smartphone is right on par with its competitors.

That’s the verdict of a recent analysis by IHS Markit.

Manufacturing the Google Pixel

All told, the bill of materials (BOM) cost for the new Google Pixel XL 5.5-in phone with 32 gigabytes (GB) of NAND flash memory comes to USD$278, according to a preliminary teardown estimate.

After including $7.75 in basic manufacturing costs, IHS Markit pegs the total cost to manufacture the Google Pixel XL at $285.75.

The market research firm found that with an unsubsidized price of $769, the direct manufacturing cost-to-sales-price ratio falls in line with those of direct competitors in the smartphone market, such as the Apple iPhone 7 Plus and the Samsung Galaxy S7 Edge.

Pixel XL Teardown. (Image courtesy of IHS Markit.)

“Total BOM costs for the Google Pixel XL are, not surprisingly, in line with those of other competitors, because the supply base and specs 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 of cost benchmarking services for IHS Markit.

Interestingly, although the company is touting the Pixel as the first smartphone to be designed and built by Google, it was discovered shortly after the product announcement that the Pixel is actually being manufactured by Taiwanese giant HTC.

That would explain why the basic manufacturing costs for this first-generation device are so low.

Inside the Pixel

The Pixel comes in two variants—the 5.0-inch Pixel and the 5.5-inch Pixel XL—along with two memory capacities (32 and 128 GB).

Both the Pixel and Pixel XL feature an aluminum enclosure with active-matrix organic light-emitting-diode (AMOLED) displays, which also are utilized for Google’s Daydream virtual reality platform. Both models also come with 4 GB of LPDDR4 RAM and Qualcomm’s Snapdragon 821 CAT-12 LTE modem design, and both feature a 12-megapixel camera with a 1.55-µm imaging pixel size.

(Image courtesy of IHS Markit.)

IHS Markit analyst Wayne Lam described the Pixel as Google’s attempt to “triple down” on Android: “First, the Pixel is a big departure from the Nexus line of smartphones in that Google has now taken over all aspects of the hardware design and software integration.”

“Second,” Lam continued, “this vertical integration of hardware and software is a product strategy taken straight out of Apple’s playbook. And third, not only is Google, through the Pixel, directly competing with Apple, but also rivaling its own Android ecosystem partners in introducing new premium hardware to compete with the likes of Samsung, Huawei and LG.”

Lam’s comment about competition raises an interesting point regarding Google’s decision to have HTC manufacture the Pixel. If Tesla had Ford doing its manufacturing, would the former company have any hope of challenging the latter?

For more information, visit the IHS Markit website.