Google does subsidize the Nexus line. There was an argument a few weeks back about if google subsidizes it's nexus here it is
"We already recognize that the company is likely subsidizing their own pricing on the Nexus 5 at $349 while the carriers are selling it off contract for $100 more. "
http://9to5google.com/2013/11/15/ed...-is-to-out-nokia-nokia-and-its-going-to-work/
I'm sure Google make money from each device sold.
Cell companies make money, they make high MSRP, so make even more money. It is what they do.
jimmyjoebob said:
I'm sure Google make money from each device sold.
Cell companies make money, they make high MSRP, so make even more money. It is what they do.
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Did you read the article? Google is not trying to make money from the hardware in nexus or Motorola it's about the software and ad sales and search engine proliferation
That's not proof of anything. It's one guy's opinion that Google is "likely" subsidizing them.
How much do you think it costs to build a smartphone? You're looking at maybe $200-$250 for material costs and then a bit for marketing. When Apple (for example) sells someone a 64gb iPhone for $849, there's roughly $600 of pure profit worked into that price. The only difference with the N5 is that Google is selling the phones basically at cost rather than artificially inflating a $200 bill of materials with a bunch of profit. There's no "subsidizing" going on.
maxpower7 said:
That's not proof of anything. It's one guy's opinion that Google is "likely" subsidizing them.
How much do you think it costs to build a smartphone? You're looking at maybe $200-$250 for material costs and then a bit for marketing. When Apple (for example) sells someone a 64gb iPhone for $849, there's roughly $600 of pure profit worked into that price. The only difference with the N5 is that Google is selling the phones basically at cost rather than artificially inflating a $200 bill of materials with a bunch of profit. There's no "subsidizing" going on.
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In other words you just proved me correct. If a phone costs 250 to build the other costs would be more than 100 dollars and therefore the point is not to make a profit on nexus and now Motorola's hardware ( which neither have ever brought a profit) it is to proliferate google services and Ad revenue. All the while giving the consumer the affordability in cheaper phones while increasing their reach with their services.
AndreaCristiano said:
If a phone costs 250 to build the other costs would be more than 100 dollars
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That's pure speculation on your part unless you've actually seen Google's financial data. I really don't think that marketing costs for the N5 add up to more than 100 bucks per phone. What other costs are you taking into consideration?
I agree, it's just an opinion.
However, Google's Motorola phone effort is more likely trying to kill the competition (Apple, Samsung, etc) by lowering prices while maintaining state of the art performance. Samsung sees the writing on the wall and is trying to establish an OS, app and tune market, etc.
If the components cost x and the phone sells for y, there is a huge missing piece, a few actually. Development costs, qa, regulations, etc.
In the case of android, and especially the nexus line software development is nill. the Dev was going to happen regardless the nexus. Drivers, and things like that of course aren't free, so there is that software and hardware integration.
Anyway, until someone posts the bom for the phone parts it's hard to even guess, even then it is a guess cause no one is going to release the Dev costs.
Sent from my Nexus 10 using Tapatalk 4
maxpower7 said:
That's pure speculation on your part unless you've actually seen Google's financial data. I really don't think that marketing costs for the N5 add up to more than 100 bucks per phone. What other costs are you taking into consideration?
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First off it's not speculation. We're working on your numbers 250 for the cost of production for a phone. Being sold at 350 that's 100 dollars. That hundred dollars doesn't cover the advertising, the web presence on the sites, shipping and handling in the sales process, supprt teams for customer service, etc etc there are many costs incurred that the average person doesn't realize. Let's not forget the R&D to make the phone even if it is based off another there was still R&D. In the end it averages out to much more than 100 dollars. Ps it's pretty well known that nexus devices have not made google money and once again it's about the services not the hardware. Example why does iOS have every google app available to expand its reach and increase profitability. If it really wanted android hardware to be the main focus google apps would be android only
TiltedAz said:
I agree, it's just an opinion.
However, Google's Motorola phone effort is more likely trying to kill the competition (Apple, Samsung, etc) by lowering prices while maintaining state of the art performance. Samsung sees the writing on the wall and is trying to establish an OS, app and tune market, etc.
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Click to collapse
Totally on the right track :good:
Are you really using an opinion based article as concrete proof of a company's business plan?
samagon said:
If the components cost x and the phone sells for y, there is a huge missing piece, a few actually. Development costs, qa, regulations, etc.
In the case of android, and especially the nexus line software development is nill. the Dev was going to happen regardless the nexus. Drivers, and things like that of course aren't free, so there is that software and hardware integration.
Anyway, until someone posts the bom for the phone parts it's hard to even guess, even then it is a guess cause no one is going to release the Dev costs.
Sent from my Nexus 10 using Tapatalk 4
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Click to collapse
Although actual figures will not be released educated guesses will obviously bring to realization that 50-100 in profit per phone is not viable
One I'm not using it as proof per se but it is a logical conclusion. I mean have none of you taken business courses in school and or own a business? I did and still own a business. If mine or any other business ran on the supposed razor thin margins that these phones bring to google they would be closed. It's obvious that the focus is on the means that the phones provide google not the phone it' self
Its basically the same principle as giving android away for free Google makes its money off of the services that are within android and its ads.
Sent from my Nexus 5
AndreaCristiano said:
Google does subsidize the Nexus line. There was an argument a few weeks back about if google subsidizes it's nexus here it is
"We already recognize that the company is likely subsidizing their own pricing on the Nexus 5 at $349 while the carriers are selling it off contract for $100 more. "
http://9to5google.com/2013/11/15/ed...-is-to-out-nokia-nokia-and-its-going-to-work/
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Click to collapse
This article means nothing. The phone isn't sold at a loss or even to break even. Now that's my opinion which holds as much stock as this guys opinion
>^.^< Sent from meow nexus5
Your opinion is illogical and doesn't make sense. Just because you believe something to be true doesn't make it so. Also just because Google sells the phone at a loss does not make the phone any less stellar nor does i t make Google inferior. Quite the contrary it makes them quite intelligent because the risk reward is heavily in their favor. Loss of a few million to make a few billion is always smart
Sent from my Nexus 5
AndreaCristiano said:
One I'm not using it as proof per se but it is a logical conclusion. I mean have none of you taken business courses in school and or own a business? I did and still own a business. If mine or any other business ran on the supposed razor thin margins that these phones bring to google they would be closed. It's obvious that the focus is on the means that the phones provide google not the phone it' self
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Click to collapse
Have you taken any introductory writing courses in school? If you did you would know you can't cite opinion based articles as fact.
When did I ever say it was fact? No where did I state it was fact. I stated and a few have concurred that it is an educated guess by looking at the numbers. So please unless you have something to contribute don't put words into my mouth
Sent from my Nexus 5
AndreaCristiano said:
First off it's not speculation. We're working on your numbers 250 for the cost of production for a phone. Being sold at 350 that's 100 dollars. That hundred dollars doesn't cover the advertising, the web presence on the sites, shipping and handling in the sales process, supprt teams for customer service, etc etc there are many costs incurred that the average person doesn't realize. Let's not forget the R&D to make the phone even if it is based off another there was still R&D. In the end it averages out to much more than 100 dollars. Ps it's pretty well known that nexus devices have not made google money and once again it's about the services not the hardware. Example why does iOS have every google app available to expand its reach and increase profitability. If it really wanted android hardware to be the main focus google apps would be android only
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Click to collapse
I'm well aware of Google's intent with the Nexus program and the fact that they don't make any money off it. My point is that you couldn't possibly know Google's costs associated with building and selling the phone, so everything you're saying is speculation.
I don't have any hard data either, so I could very well be proven wrong. I'm just saying that the article in the OP doesn't prove anything.
No proof positive no. It does lend credence to those whom are like minded and realize that the nexus program and now Motorola are about two things the proliferation of Google services and lowering costs of the competitions phones. All the while operation at a loss for these programs to further the growth in its real mainstay and money making programs search ads etc. I started this thread because some people do not want to see or admit the obvious and for some reason think that it is heresy to even suggest these things
Sent from my Nexus 5
Related
Google and LG most likely make NO money from selling the Nexus 4 at the $299 pricepoint. The Nexus 4 is identical to the Optimus G, which is suppose to be LG's cash cow. Same proc, same screen. Tbe build actually looks nicer on the Nexus 4. The camera is a wash since the 13MP one sucks and the 8MP is identical on both. So literally the only difference is whether you want LTE or not. Is LTE (and a subjectively much uglier design) worth $200+ price premium for the Optimus G? The Nexus 4 also has pure Android which is also a big plus, So why is LG releasing the (much better) Nexus 4 at a no-profit price and undercutting their cash cow the Optimus G? They are barely making squat right now in the mobile phone space. This makes no business sense.
I'm pretty sure LG just builds the phone and gets paid for it, Google probably will sell it close to what they paid to get it built. So LG isn't losing money, Google is just breaking even or maybe barely losing.
Sent from my Galaxy Nexus using xda premium
Improving their brand image while simultaneously getting their brand name out there?
While not entirely the same, you could argue that with the Galaxy Nexus, it was fighting with the S2 and a little bit of the S3.
Yet Samsung managed to really make their push during that time period. People have tons of horror stories when it comes to LG. If they play their cards right with these devices, they'll have a much brighter future.
Sent from my Transformer Prime TF201 using Xparent Cyan Tapatalk 2
The Xiaomi Mi2 will also be selling at a loss ($310 vs a cost of $370), and has pretty much identical specs as the Nexus 4. I think they can manage to break even overall, especially with most sales going to the 16 GB version.
florelui001p said:
I'm pretty sure LG just builds the phone and gets paid for it, Google probably will sell it close to what they paid to get it built. So LG isn't losing money, Google is just breaking even or maybe barely losing.
Sent from my Galaxy Nexus using xda premium
Click to expand...
Click to collapse
X2
Google pays for it, and then they sell it to us with expensive taxes via Google Play :B
I'm assuming LG developed the phone for a flat contract price to Google.
Google is likely making little to nothing on selling the price.
They are likely straight up buying marketshare for android and enticing people to buy into their ecosystem while they make money off apps, movies, tv shows, music, and ads.
datwunkid said:
I'm assuming LG developed the phone for a flat contract price to Google.
Google is likely making little to nothing on selling the price.
They are likely straight up buying marketshare for android and enticing people to buy into their ecosystem while they make money off apps, movies, tv shows, music, and ads.
Click to expand...
Click to collapse
They sure are!
I will mostly likely be dropping the iPhone ecosystem for Android because of the Nexus 4 come November 13th. Eventually I will also convince others who rely on my smartphone knowledge on what to buy to get the Nexus 4. So it has done its job even if Google isn't making a profit off of the hardware. They will eventually make profit off of me from the Google Play content I (and many others I convince) purchase.
Excellent post datwunkid :good:
I think Google is taking the hit and selling it close to cost. You also have to factor in that the retail cost of some phones have carrier markup added in as well so that they can make some extra $$$ off people buying off contract. They're probably selling it close to cost and the Nexus line isn't really a big seller to begin with so nobody's really losing a boatload of money here. LG gets to have their name attached to what is looking to be an incredible Android phone (and DEAD SEXY!!!) which will get them back into the good graces of some of the Android fans out there. Also remember Google is an ad company - selling phones for profit isn't where they're making the lion's share of their money and while I'm sure they care somewhat about how well this device does, it'll barely have any effect on their bottom line.
Let's not kid ourselves. Google is definitely making money here. I know in the retail market, mark-up is routinely 1000%. I wouldn't be surprised one bit if LG can spit these phones out in mass production at $50 a unit or cheaper. Anybody that's had any experience in buying mass quantities knows that Google is making money.
When you see service providers selling phones out of contract for $600-$800, your seeing first hand the companies rape/screw the general public like they do best. Even when you buy a phone for a subsidized price from one of the big four, do you really think that are not still making money off the sale of the unit? Don't kid yourself...
giant22000 said:
Let's not kid ourselves. Google is definitely making money here. I know in the retail market, mark-up is routinely 1000%. I wouldn't be surprised one bit if LG can spit these phones out in mass production at $50 a unit or cheaper. Anybody that's had any experience in buying mass quantities knows that Google is making money.
When you see service providers selling phones out of contract for $600-$800, your seeing first hand the companies rape/screw the general public like they do best. Even when you buy a phone for a subsidized price from one of the big four, do you really think that are not still making money off the sale of the unit? Don't kid yourself...
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Click to collapse
You ever look at any tear downs of phones? The parts on this phone are probably worth two hundred or so dollars, plus assembly, warranty claims, marketing. There will be a thin margin, but it will be there. I don't think many carriers will pick up the phone, so it will only really appeal to people who avoid contracts, anyway.
Sent from my HTC Vision using xda app-developers app
It makes sense for LG to do it at little to no profit because releasing the phone would help their market and image in the long run if the phone is a success. Google is baking on the consumers to buy apps, books, music, and magazines from their store.
giant22000 said:
I wouldn't be surprised one bit if LG can spit these phones out in mass production at $50 a unit or cheaper.
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Click to collapse
Have you been drinking tonight by any chance? Your post has me curious :laugh:
Borteeo said:
You ever look at any tear downs of phones? The parts on this phone are probably worth two hundred or so dollars, plus assembly, warranty claims, marketing. There will be a thin margin, but it will be there. I don't think many carriers will pick up the phone, so it will only really appeal to people who avoid contracts, anyway.
Sent from my HTC Vision using xda app-developers app
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Click to collapse
Think of it this way. When it comes to building a pc, you can't build one as cheap as you can buy one from one of the big boys. Plain and simple, they buy parts by the 1000's. These parts are heavily discounted at a contracted, negotiated price when bought this way.
I can assure that NO company is going to put forth the effort for a small profit margin. That's just how the corporate world works. If it doesn't make good/excellent profits, it's simply not worth the time or effort.
y would you complain about something like this though. the price is a good thing :good:
No complaining here! I'm totally stoked about it's price point. Best bang for the buck bar-none in my book! Can't wait to order...
I can assure that NO company is going to put forth the effort for a small profit margin. That's just how the corporate world works. If it doesn't make good/excellent profits, it's simply not worth the time or effort.
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Still I disagree about $50, there are actual documented break down of iPhone 4S hardware cost, is around $180, though the 5 is cheaper. Give the chinese slaves a break.
Sent from my R800x
Well here is the news Google partnered with lg because of the price as they are the only one who agreed to make phone at this price level. Its also get back lg to the market, despite their products are cool but their developers are sucks, lazy people wouldnt work on old devices to bring latest os so people like me promised won't buy lg product ever again, other company like Sony and Samsung refused Google to make smartphone with this spec for this price. But who cares about the partner as long as Google controls the os. I'm getting this as soon as it goes live for sale.
Sent from my Galaxy Nexus using xda app-developers app
Maybe Samsung doesn't want to create any more nexus phone just because of this. Their Galaxy S line and Note line will be ruined.
The same thing happens with the nexus 10, which is cheaper and FAR more specwise than note 10.1
Sent from my GT-I9100 using Tapatalk 2
qreffie said:
I think Google is taking the hit and selling it close to cost.
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Click to collapse
The iPhone 5 costs about 200$ (16gb I think). I don't think the Nexus will cost much more. So, Google will get money out of this
Google was earning money even with the 16gb a 249$
I you think it costs them that money to make a phone you are mistaken.
I have seen retail buy in prices for handsets in bulk, and those would raise your eye brows!
so manufacturing prices would be much less.
Am I the only one here thinking that it was part of google's plan to make it look like they sold a bunch of N4s in order to get the media's attention by bragging about how many they sold? Just Google: "nexus 4 sold out". You will find many websites reporting that nexus 4 are selling like hot cakes/or are sold out. I'm going to have to look at the next news paper, I bet we will see it in the headlines. This is wonderful news for Google. Great advertisement.
More over I would like to know what you guys think of this. Don't you think that such a rich company like Google would have for seen this?
Also the fact that the number of sold devices are not being reported, wouldn't that indicate that the amount of devices are actually not that much after all? (mentioning the # of sold units would discredit their bragging right? - Of course, only if it is not high)
Chances are they have a lot on stock but want to sell only a certain amount for the time being.
Now what would concern me is, if it actually is the truth that they ran out of supply. I mean, LG? There are few people who have faith in LG, their android update policy is enough to associate that company with incompetence.
Even with the nexus phone being an LG, they already managed to leave a bad impression in countries with no play store by announcing a price which could be nearly up to double the price of the nexus 4 in the play store.
What if LG is not able to keep up with demand? What is your say? What do you think is going on?
I visited a site that mentioned that Google has done this before, in order to see how high the demand is and to fulfill the needs a few days/weeks/month later. Was not following the galaxy nexus sale , anyone that experienced this here?
Hope this thread doesn't get closed, I could imagine some interesting discussion going on
no, just scumbags trying to make a profit by hogging all the stock
AznDud333 said:
no, just scumbags trying to make a profit by hogging all the stock
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Click to collapse
I think it its engineered, why not Apple do it all the time
Naw, I mean, there really weren't any commercials over it or anything. Google has the money to spend on advertising for it, but they honestly didn't. I feel they just weren't too sure on when to do it themselves and that we were probably making more out of it than needed to be.
dahmmy said:
I think it its engineered, why not Apple do it all the time
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Click to collapse
google's site never lags
it lagged today.
It's a big global conspiracy to ruin your day. Mission accomplished.
If this was Apple then, yes, I would believe it was intentional but honestly the server was crashing. What I saw you can't fake. It was like a DDoS attack. That server was basically brought to its knees. SERIOUSLY.
Sent from my Nexus 7
Ravynmagi said:
It's a big global conspiracy to ruin your day. Mission accomplished.
Click to expand...
Click to collapse
The Illuminati. Yes! They are watching us!
@above: hmmm. I prefer Lg is incompetent
I think it may be a combination of Google's lack of concern about their customers combined with a poor working relationship with LG. I don't think Google wants publicity about this launch because they and LG won't come off looking too good. Google must have thought it was getting more units from LG because they had indicated they would sell the Nexus 4 via Playstore in the Netherlands and Belgium. Then at the last minute, they had to cancel those commitments because they didn't get enough units from LG. At the same time, non-US carriers selling the phone at a much higher price than Google got units ahead of launch time so their customers could physically have the phone today. Hence, you have a number of users posting threads here about problems with their brand new Nexus 4 phones, which they have in hand. So, LG shorted Google to send phones to vendors that sell the Nexus 4 at a higher price. I suspect the whole sales cycle of this phone may be marked by problems between Google and LG, resulting in supply shortages for the lower priced Google-sold phones. If consumers want the phone and don't want to wait for weeks at a time between LG's periodic shipment of a meager supply to Google, you may be forced to buy from other vendors at a higher price or, in the US, a contract commitment to T-Mobile. It looks like Google + LG= oil + water; they don't mix well.
mke1973 said:
I think it may be a combination of Google's lack of concern about their customers combined with a poor working relationship with LG. I don't think Google wants publicity about this launch because they and LG won't come off looking too good. Google must have thought it was getting more units from LG because they had indicated they would sell the Nexus 4 via Playstore in the Netherlands and Belgium. Then at the last minute, they had to cancel those commitments because they didn't get enough units from LG. At the same time, non-US carriers selling the phone at a much higher price than Google got units ahead of launch time so their customers could physically have the phone today. Hence, you have a number of users posting threads here about problems with their brand new Nexus 4 phones, which they have in hand. So, LG shorted Google to send phones to vendors that sell the Nexus 4 at a higher price. I suspect the whole sales cycle of this phone may be marked by problems between Google and LG, resulting in supply shortages for the lower priced Google-sold phones. If consumers want the phone and don't want to wait for weeks at a time between LG's periodic shipment of a meager supply to Google, you may be forced to buy from other vendors at a higher price or, in the US, a contract commitment to T-Mobile. It looks like Google + LG= oil + water; they don't mix well.
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Click to collapse
.... Or maybe not. That's quite the stretch.
shadehh said:
Also the fact that the number of sold devices are not being reported, wouldn't that indicate that the amount of devices are actually not that much after all? (mentioning the # of sold units would discredit their bragging right? - Of course, only if it is not high)
Click to expand...
Click to collapse
It is Google's policy not to release sales figures. So it indicates absolutely nothing. Asus released some Nexus 7 sales figures last month and apparently Google was not too happy.
This is what happens when things are under-priced. Whether mandated by law (price controls) or whether a company does it out of its own desire (Nexus 4). Selling something below its true value will lead to shortages because the demand will be too heavy. Combine that with Google probably trying to not overestimate the demand in order to not build too many, it should be no surprise that it sold out so quickly.
FallN said:
If this was Apple then, yes, I would believe it was intentional but honestly the server was crashing. What I saw you can't fake. It was like a DDoS attack. That server was basically brought to its knees. SERIOUSLY.
Sent from my Nexus 7
Click to expand...
Click to collapse
very true... i had an N4 in my cart 8 times today (EIGHT freakin times) and each and every time i tried to proceed, i got that craptastic yellow banner telling me that something happened on the back end. their servers were absolutely hammered.
PincheKeith said:
This is what happens when things are under-priced. Whether mandated by law (price controls) or whether a company does it out of its own desire (Nexus 4). Selling something below its true value will lead to shortages because the demand will be too heavy. Combine that with Google probably trying to not overestimate the demand in order to not build too many, it should be no surprise that it sold out so quickly.
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Click to collapse
I'm happy with the low price and even if I have to wait a year to get a nexus 4 I'm so happy Google set new standards. I don't find the price too cheap, they could have easily added 50 bucks more for all I care. But I'm glad they set new standards for great hardware all others phone manufacturers must now adjust
I waited all day, from 3:00 AM EST when it was SUPPOSED to launch, to 12:00 PM EST when the "second" launch time was "announced", resulting in two times in which the "Add to Cart" button popped up but didn't work after clicking through. The minute I step inside my house, I rush to my computer, and see a nice, red SOLD OUT sign.
It had to be either a) testing the waters in terms of demand for the device (highly unlikely), b) a publicity stunt in order to garner more (free) attention for the Nexus4 (as we say it, any publicity is good publicity), or c) as stated a shortage of devices as a result between miscommunication/communication breakdowns between LG and Google.
Thoroughly disappointed. I sold my phone (GNexus) in the hopes of upgrading for very little $, and now I'm stuck with no phone at all.
oceansaber said:
I waited all day, from 3:00 AM EST when it was SUPPOSED to launch, to 12:00 PM EST when the "second" launch time was "announced", resulting in two times in which the "Add to Cart" button popped up but didn't work after clicking through. The minute I step inside my house, I rush to my computer, and see a nice, red SOLD OUT sign.
It had to be either a) testing the waters in terms of demand for the device (highly unlikely), b) a publicity stunt in order to garner more (free) attention for the Nexus4 (as we say it, any publicity is good publicity), or c) as stated a shortage of devices as a result between miscommunication/communication breakdowns between LG and Google.
Thoroughly disappointed. I sold my phone (GNexus) in the hopes of upgrading for very little $, and now I'm stuck with no phone at all.
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Click to collapse
man, i feel you. i sold my gnex and my backup (g2x) device in anticipation of the nexus 4. I'm old and tired. So, i'm just going to go to my tmobile store and pick up a note 2. I got one for my wife last week and she has been completely satisfied with it. I'll re-evaluate the state of android in a couple months, whereby I might sell the note 2 to finally get the nexus 4. we'll see.
If you believe that its all a conspiracy, put your aluminum foil hat back on and go sit in the corner.
PincheKeith said:
This is what happens when things are under-priced. Whether mandated by law (price controls) or whether a company does it out of its own desire (Nexus 4). Selling something below its true value will lead to shortages because the demand will be too heavy. Combine that with Google probably trying to not overestimate the demand in order to not build too many, it should be no surprise that it sold out so quickly.
Click to expand...
Click to collapse
Finally someone who understand economics.
Put gas half price today. Guess what will happen. Even if gas stations prepared. EVERYONE will gas and you can't prepare for that. Supply is driven by how valuable it is to sell. Demand is determined by how much value you get. They released a 600$ phone at 300$. Take off your tinfoil hats and go to school.
There is no conspiracy. We are talking about about a relatively small cell phone player in LG and a device with a small profit margin. Considering that both these companies are banking on the same profit model, ie, google wants large volume sales for ads and LG wants large volume to compensate for smaller net profits per phone. With the next big phone literally always around the corner, to delay sales in any way is very bad for both companies.
shadehh said:
I don't find the price too cheap, they could have easily added 50 bucks more for all I care.
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Click to collapse
Then it is too cheap If people are willing to pay $400 or $450, and they sell it for $350, that's too cheap. That's why demand is (and should be!) so high.
I don't think they did this intentionally, they have a great device at a great price and it sold out.
So what do you guys think?
I'm still puzzled by how Google can sell basically the same phone as the Optimus G for half the price.
Benchmarks show heat issues with the N4 and very low heat tolerances before the CPU/GPU starts throttling massively cutting performance basically in half.
So maybe when Google approached LG to build the N4 and told them they need to sell it for $299 off contract, LG was like..,"hmmm.. we do have a bunch of rejected bin parts from the Optimus G we could sell for half price. Deal, we'll build the N4 for $299 Cha-Ching!!$!"
Manufacturers bin parts all the time, Intel, Nvidia ect. bin their CPU's and GPU's and basically put the rejected ones in lower end models and downclocks them.
LG makes some amazing IPS $1000 panels for Apple and Dell, the ones that don't cut it get sold for basically nothing and put into cheaper non-brand name cases (Yamakasi,Acheiva ect) and sold for $300.
Makes me think that maybe LG is doing the same with the N4 line up. What do you guys think? These thermal issues the N4 is facing is pointing me in that direction. Lower bin parts.
No
Sent from my Galaxy Nexus using xda app-developers app
Interesting approach. But Google would go nuts if LG would so something like that. I can't really give an educated answer but I personally don't think they do. Just a feeling.
Dan37tz said:
So what do you guys think?
I'm still puzzled by how Google can sell basically the same phone as the Optimus G for half the price.
Benchmarks show heat issues with the N4 and very low heat tolerances before the CPU/GPU starts throttling massively cutting performance basically in half.
So maybe when Google approached LG to build the N4 and told them they need to sell it for $299 off contract, LG was like..,"hmmm.. we do have a bunch of rejected bin parts from the Optimus G we could sell for half price. Deal, we'll build the N4 for $299 Cha-Ching!!$!"
Manufacturers bin parts all the time, Intel, Nvidia ect. bin their CPU's and GPU's and basically put the rejected ones in lower end models and downclocks them.
LG makes some amazing IPS $1000 panels for Apple and Dell, the ones that don't cut it get sold for basically nothing and put into cheaper non-brand name cases (Yamakasi,Acheiva ect) and sold for $300.
Makes me think that maybe LG is doing the same with the N4 line up. What do you guys think? These thermal issues the N4 is facing is pointing me in that direction. Lower bin parts.
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Click to collapse
It is very possible and happen a lot in computer world.
But we can't know for sure. Both LG and Google won't say anything about this.
It costs apple like $166 to make an iPhone..google is making money..believe it.The markup is insane on phones..
Sent from my Nexus 7 using xda app-developers app
Dan37tz said:
So what do you guys think?
I'm still puzzled by how Google can sell basically the same phone as the Optimus G for half the price.
Benchmarks show heat issues with the N4 and very low heat tolerances before the CPU/GPU starts throttling massively cutting performance basically in half.
So maybe when Google approached LG to build the N4 and told them they need to sell it for $299 off contract, LG was like..,"hmmm.. we do have a bunch of rejected bin parts from the Optimus G we could sell for half price. Deal, we'll build the N4 for $299 Cha-Ching!!$!"
Manufacturers bin parts all the time, Intel, Nvidia ect. bin their CPU's and GPU's and basically put the rejected ones in lower end models and downclocks them.
LG makes some amazing IPS $1000 panels for Apple and Dell, the ones that don't cut it get sold for basically nothing and put into cheaper non-brand name cases (Yamakasi,Acheiva ect) and sold for $300.
Makes me think that maybe LG is doing the same with the N4 line up. What do you guys think? These thermal issues the N4 is facing is pointing me in that direction. Lower bin parts.
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Click to collapse
Unlikely tbh. Good comspiracy thogh I think google subsidizes it to sell it almost above cost. LG doesn't, thus non play countries are screwed. EU wouldn't allow them to sell it at cost or below so the 8GB is slightly above cost, and they know that many people won't buy that, so the 16GB is all profit.
Dan37tz said:
So what do you guys think?
I'm still puzzled by how Google can sell basically the same phone as the Optimus G for half the price.
Benchmarks show heat issues with the N4 and very low heat tolerances before the CPU/GPU starts throttling massively cutting performance basically in half.
So maybe when Google approached LG to build the N4 and told them they need to sell it for $299 off contract, LG was like..,"hmmm.. we do have a bunch of rejected bin parts from the Optimus G we could sell for half price. Deal, we'll build the N4 for $299 Cha-Ching!!$!"
Manufacturers bin parts all the time, Intel, Nvidia ect. bin their CPU's and GPU's and basically put the rejected ones in lower end models and downclocks them.
LG makes some amazing IPS $1000 panels for Apple and Dell, the ones that don't cut it get sold for basically nothing and put into cheaper non-brand name cases (Yamakasi,Acheiva ect) and sold for $300.
Makes me think that maybe LG is doing the same with the N4 line up. What do you guys think? These thermal issues the N4 is facing is pointing me in that direction. Lower bin parts.
Click to expand...
Click to collapse
Ah stop this kind of conspiracy. Say it when you have some proof.
Richieboy67 said:
It costs apple like $166 to make an iPhone..google is making money..believe it.The markup is insane on phones..
Sent from my Nexus 7 using xda app-developers app
Click to expand...
Click to collapse
this
+ selling it for a lower price means selling more. More sold devices result in more money through play store (apps, music, books, movies...)
Another dumb conspiracy theory.
Mods, we need a "dumb conspiracy theories because I wasn't able to get one" thread to consolidate these into.
If this were the case, you know warranty returns and repairs and everything else would drive up the cost for both LG and Google, no?
Richieboy67 said:
It costs apple like $166 to make an iPhone..google is making money..believe it.The markup is insane on phones..
Sent from my Nexus 7 using xda app-developers app
Click to expand...
Click to collapse
Not to mention the cost of brick and mortar stores as well as the amount of advertising that Apple does vs what Google does for the Nexus devices. Adding more advanced technology, like LTE radios and microSD readers will also mean higher costs (perhaps not a huge amount, but additional costs, none the less).
Google is in the search business, ad business and by getting people onto their phones they are also getting people into the google eco system its like apple believe it or not, people buy into it because they like the product at first but before they know it all their music is on itunes and they are buying apps from the app store all making apple money. Same applies there isnt much you can do on an android phone without making google money one way or another. either from the ads displayed or searches completed then there is play music which is aggressively priced for digital download. coincidence. no they want you locked into all things google. So by subing the phone initially they will predict the revenue made through other means will counter that,
so no it is not made from reject parts
also why would LG even care if this is successful. They make the same amount per handset as selling directly to distributors just google is acting as the distributor and lowering the price by subsidising it.
If i was a manufacturer like LG i would hope it sold in its millions as it would make me as a manufacturer some quick cash that I can then pump back into future R&D and manufacturing processes meaning it can compete better on par with its rivals
Simple really
hbkmog said:
Ah stop this kind of conspiracy. Say it when you have some proof.
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Click to collapse
Well I'm still kind of lost why the performance of this device suffers so much compared to other phones with the same chipset.
Hell for example the newly introducted HTC DNA which uses the identical chipset S4 pro, is pulling in over 8000 in quadrant! It's also pushing a 1080p screen with 440ppi!!!
Then we have the N4 here, with much less pixels to tax the GPU/CPU and it's pulling in 4000 Quadrants. There is something majorly wrong here.
I don't think it's the design of the phone, the N4 is not a super thin lightweight device. It's pretty thick so there should be plenty of room inside for heat dissipation.
I also don't think it has anything to do with software, the DNA is running 4.1 Jellybean, with a whole bunch of Verizon crap on it.
The N4 is running 4.2 Pure Jellybean, which is basically the same just with a couple camera tricks, a new keyboard and no crapware to slow it down. It's a pure unaltered android software so if it really was just an issue with the kernal or rom, Google would have fixed it easily and immediately with the latest OTA. That OTA didn't do crap and it still suffers from the performance issues.
Makes me believe it's an actual problem with the chipset itself, a lower bin set.
its simply down to power management which others incorporate where as the N4 has not as its not a feature baked into android. However devs will come up with these options as add ons and you will see where you can tweek the processor
Nope nope nope
ok the thing is these phones are about $700 with no sub from carrier. google is shelling out about $380 a unit for the phone to be sold at the price they are being sold for $299 and $349us or $309 or $359 cnd. that price is subsidize by google. so to answer the question of OP no its not cheaper parts for the cheaper phone! the part for the phone is still the same cost it just google will be making their money back on ads and playstore purchase and also google drive upgrades.. I mean $380 a unit is a lot but if google is truly the ad's king they will rake in the dough from all the revenue of that which would mean peanuts for $380 a phone!
xdviper said:
If this were the case, you know warranty returns and repairs and everything else would drive up the cost for both LG and Google, no?
Click to expand...
Click to collapse
The thing is Google never advertised that the N4 should achieve a certain score on a benchmark. As far as they're concern, as long as the device runs their software smoothly, it doesn't matter what the benchmarks say.
Alicklee said:
ok the thing is these phones are about $700 with no sub from carrier. google is shelling out about $380 a unit for the phone to be sold at the price they are being sold for $299 and $349us or $309 or $359 cnd. that price is subsidize by google. so to answer the question of OP no its not cheaper parts for the cheaper phone! the part for the phone is still the same cost it just google will be making their money back on ads and playstore purchase and also google drive upgrades.. I mean $380 a unit is a lot but if google is truly the ad's king they will rake in the dough from all the revenue of that which would mean peanuts for $380 a phone!
Click to expand...
Click to collapse
I would guess it costs them well under $200 for them to make this phone..the optimus also..
Sent from my Nexus 7 using xda app-developers app
This thread makes my head hurt. I gave it a 1 out of 5 stars because there is no option for 0 star. By this logic then I suggest you buy the LG Optimus G instead.
Google and T-Mobile get the device from LG. Google is selling the Nexus 4 for cheap because they have lots of money. T-Mobile is selling the Nexus 4 at $500 because they like to rip off people. The end.
do you even know what binning is or how it actually works?
I think LG of all companies wanted to do the Nexus because they wanted to gain a better smartphone manufacturer image. What better way to do this by doing a highly anticipated phone like this? Think of all the posts trashing LG about their phones (including me). I was so pissed when I found out. But the more I think about it, most of the issues I've had with LG phones have been software related. Hopefully with stock Android, the phone will regain the trust from the masses. But I highly doubt LG would make a crappy phone to try and rebuild their presence as a smartphone manufacturer.
Sent from my LT30at using xda app-developers app
As most(if not all) of us watch google i/o, google released the galaxy s4 with stock android, as well as "prompt" future updates. What do you guys think this means for the future of nexus do you think companies will continue to build phones for google when they can just appeal to everyone and relase a version of their flagship with stock android?
I guess I never really thought about it yet. That's a good point though. I just got into the Nexus family around a month and a half ago and I already feel at home. If there is not a future for Nexus devices, I will be extremely sad. Yeah, you still get pure Android, plus an unlocked bootloader, but there's just something about having a Nexus. I guess I just feel unique having it, you know? I'm not just another guy with a Galaxy S phone. Plus, having a Nexus phone kind of shows that you're a power user/developer. I dunno...I just really love my Nexus 4 and want to be able to buy the next one when I'm ready.
That all said, it makes perfect sense. I'm pretty sure Google sells the Nexus at a loss. And if that's not enough, you see threads on here all the time with people finding the smallest reasons for getting an RMA, reasons that aren't even valid but Google fulfills them anyway. Not only that, but people will brick their Nexus cuz they're stupid and come here to ask what they can do to RMA. They do this when it was CLEARLY their fault for bricking it and they think Google should have to cover the cost for a new one because they (the person) flashed a ROM/kernel for a different phone. If I were Google, I would probably be looking at this option, sadly.
the S4 isnt the only non nexus that has been released in the past with pure android, nor will it be the last. htc has released stock android phones before, so has lg. sony has even been working with aosp for the xperia http://techcrunch.com/2013/04/23/so...n-source-project-for-the-xperia-z-smartphone/
Here's the deal Nexus gives you the most bang for your buck. No one else gives you that. The N4 is half the price of the S4. The next Nexus phone will be a power house of hardware for a bargain.
Sent from my Nexus 4 using xda app-developers app
simms22 said:
the S4 isnt the only non nexus that has been released in the past with pure android, nor will it be the last. htc has released stock android phones before, so has lg. sony has even been working with aosp for the xperia http://techcrunch.com/2013/04/23/so...n-source-project-for-the-xperia-z-smartphone/
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This, I remember the biggest reason I bought my G2 was due to stock Android. It might not have been AOSP, but was close enough. I kept it running until I got my Nexus, and it was even running 4.2.
The Nexus lines future will always be as bright as the Sun!
galaxys said:
The Nexus lines future will always be as bright as the Sun!
Click to expand...
Click to collapse
lol i hope your right about that one. I just don't want it to be to the point that nexus users get the crap specs from an OEM that is more worried about their flagship. Why should they go all out on a nexus device when they can provide each type of consumer what they want...a version with either their skinned version of android or pure android. Just playing devil's advocate lol...
Simple there contracted to. If you don't fulfill your contract you don't get paid. To be honest I almost bought a S3 cuz I didn't do much research before buying a phone. The nexus is the best kept secret from none rooters, flashers, etc. Thank god I do tons of research before buying anything and troll xda
Sent from my Nexus 4 using xda app-developers app
Galaxy S4 is not the first device reintroduced in the i/o with stock android, back in 2011 or 2010 google introduced Galaxy Tab 10.1 with stock honeycomb in it.
And for AOSP support, not every device shipped with vanilla android in it get an AOSP support.
Sent from my Nexus 4 using Tapatalk 2
I don't get the reaction to Samsung's Google edition S4. It isn't a Nexus and shouldn't be compared with a Nexus. The Nexus product line is first and foremost designed by Google then built by their respective manufacturers. The S4 doesn't even follow the button layout for Android! This Google edition S4 is just purely software and since I assume that Samsung will be the ones responsible for maintaining the software, it'll still be second class compared to the Nexus line when it comes to the latest and greatest Android version.
intersectRaven said:
I don't get the reaction to Samsung's Google edition S4. It isn't a Nexus and shouldn't be compared with a Nexus. The Nexus product line is first and foremost designed by Google then built by their respective manufacturers. The S4 doesn't even follow the button layout for Android! This Google edition S4 is just purely software and since I assume that Samsung will be the ones responsible for maintaining the software, it'll still be second class compared to the Nexus line when it comes to the latest and greatest Android version.
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Click to collapse
Nexus 4 is based on LG Optimug G. It is almost like a little redesigned Optimus G with Google's software. SGS4 Google Edition isn't redesigned, but also got Google's software. It will be sold through Play Store, it was revealed on Google I/O by Hugo Barra and it was said that it will get updates at the same time as other Google's devices. So like it or not, SGS4 Google edition could be easily called Nexus 5. I guess they didn't want to launch new Nexus only a few months after LG Nexus 4 became widely available.
Nexus 4 is very good phone, the best for its price, but got some problems - thermal throttling, cracked glass on back, which isn't cheap to replace due to internals on backcover, limited internal space and lack of SD cards, camera isn't very good. Other than that, it is very good phone. SGS4 got great hardware, but software is its weak point and I didn't want to get another Galaxy S phone because of that. But now SGS4 Google Edition is very tempting, because finally great hardware will get great software + fast updates.
The Galaxy S4 Google Edition is not a Nexus device, as much as Samsung fanboys would believe it is.
Apart from Google calling it the Nexus S4, planning to update it timely and selling it through the play store.
I'm sure Google has nice plans for their Nexus series. Or will stop making them. Which I highly doubt! Hope.
Also I don't know how anyone could get themselves to believe they sell a product at a loss.
Sent from my Nexus 4 using xda premium
+1
Sent from my Nexus 4 using Tapatalk 2
Google/Android have a confusing agenda of where they want to go with the Android platform.
I guess their agenda is to just throw the kitchen sink at everyone and everything and hope to conquer the mobile platform that way.
I thought they had a certain way they were going to do the "Nexus" line.
Nexus is "pure google"
"Prompt" updates
"state of the art" hardware (with horrible camera..ha ha)
affordable pricing
The Galaxy Nexus and Nexus 4 (especially with the price reduction of the original GNex to $399 than $350).
I personally do not think the pure Galaxy S4 will be a big seller in the USA. Most Americans are on family plans with post paid services like ATT or Verizon.
Paying full $650 price for a smartphone only makes sense if you go prepaid and have 1-2 lines. Most Americans on post paid have 4-5 lines where subsidized phones make sense.
No one remembers the original iPhone was $499/599. It was not a big seller except for techies or people who have too much money. When Apple dropped the price to $399 it boosted sales quickly.
There is still plenty of money to be made by selling phones below $400. Most top of the line smartphone cost $200-250 to make. So profit margin is still there.
---------- Post added at 01:07 PM ---------- Previous post was at 01:02 PM ----------
myturbo1 said:
I'm sure Google has nice plans for their Nexus series. Or will stop making them. Which I highly doubt! Hope.
Also I don't know how anyone could get themselves to believe they sell a product at a loss.
Sent from my Nexus 4 using xda premium
Click to expand...
Click to collapse
I know. It costs $200-250 to make a smartphone with high end specs. Even accounting for advertising costs. Their is still $50-100 profit to spare.
I think Google purposely kept the 8GB/16GB with no SD to secure profits.
I might have missed something but does anyone else think that the fact Google bought Motorola mobility means they are going to eventually stop dependence on other phone manufacturers? It sucks to build awesome software and have to rely on other companies to put it on. Then said company delays in putting updated software on devices which in turn makes people upset they got android in the first place.
I know kinda out there but i can kinda see how this would work.
Sent from my Nexus 4 using xda premium
myturbo1 said:
Also I don't know how anyone could get themselves to believe they sell a product at a loss.
Click to expand...
Click to collapse
Because they probably do. Let's break it down. It'll be quite a journey, so pack a lunch.
The cost of materials alone cost, let's say, $250. That's only $50-$100 "profit" per unit. Considering how many units they sell, that's still a large amount of money, right? Well, that $250/unit cost doesn't cover labor (that I know of, I could be wrong; in which case disregard this point, there are plenty more). They have to pay the people to assemble the phones. Then they have to pay to ship it over-seas to get it to the U.S. Don't quote me here, but I think companies have to pay taxes on commercially-imported things. You know the U.S. government want their cut. Even if that's not true, don't worry; there are plenty of other things to eat that $50 up.
Research and Development is probably the biggest cost of any small electronics device. You have to pay those engineers to design your phone with the hardware you want and make it the size you want. I'm no pro or anything, but I'm pretty sure R&D has beta-testing of the hardware from the prototype all the way to the finished product. That's hardware that will never see light of day.
I take that back about R&D being the most costly thing about making electronics. Let's touch on the point I made of people RMA'ing. When it's legitimate, it costs the company a ridiculous amount of money. I don't even know what they do with the phones that are RMA'd, but I don't see them selling refurbished phones on the Play store. That's money down the drain. And that's when it's legitimate. Think about those guys that RMA because they are idiots and flashed the wrong kernel to the phone. Google still fulfills those RMA's! They lose so much doing this, it boggles my mind.
Now let's look at why. Why would Google knowingly sell devices at a loss? It isn't exactly the best business practice to sell things and lose money on them. First, let's look at the developers. This phone is a "developers" phone. If you're developing for Android, you are probably using a Nexus to test your app and tweak it. When you're done developing your app, what do you do? Publish it in the Play store. All these "app stores" you see everywhere are huge cash cows, and they cost almost nothing to keep going. Throw an app store up, shave a little off the top of every purchase, and kick back while the money flows in. Secondly, and this is true for every company that sells anything, there is the reputation of the company/product. You make a solid phone and sell it for pretty cheap, you get happy customers. Happy customers tend to also be returning customers. I know people that buy iPhones simply because it's called "iPhone", and has the apple on the back of it. That's purely the reputation of the phone. They were happy with their previous phones, so they simply go to the updated version of it when they need to buy another one. I picked on iPhones because it's probably the most widespread example of this, plus it has to do with a phone, which is what we're talking about.
The nexus line is Googles way of thanking developers and phone enthusiasts, they are ones that buy the phone
Sent from my Nexus 4 using xda app-developers app
---------- Post added at 04:26 PM ---------- Previous post was at 04:21 PM ----------
Johmama said:
Because they probably do. Let's break it down. It'll be quite a journey, so pack a lunch.
The cost of materials alone cost, let's say, $250. That's only $50-$100 "profit" per unit. Considering how many units they sell, that's still a large amount of money, right? Well, that $250/unit cost doesn't cover labor (that I know of, I could be wrong; in which case disregard this point, there are plenty more). They have to pay the people to assemble the phones. Then they have to pay to ship it over-seas to get it to the U.S. Don't quote me here, but I think companies have to pay taxes on commercially-imported things. You know the U.S. government want their cut. Even if that's not true, don't worry; there are plenty of other things to eat that $50 up.
Research and Development is probably the biggest cost of any small electronics device. You have to pay those engineers to design your phone with the hardware you want and make it the size you want. I'm no pro or anything, but I'm pretty sure R&D has beta-testing of the hardware from the prototype all the way to the finished product. That's hardware that will never see light of day.
I take that back about R&D being the most costly thing about making electronics. Let's touch on the point I made of people RMA'ing. When it's legitimate, it costs the company a ridiculous amount of money. I don't even know what they do with the phones that are RMA'd, but I don't see them selling refurbished phones on the Play store. That's money down the drain. And that's when it's legitimate. Think about those guys that RMA because they are idiots and flashed the wrong kernel to the phone. Google still fulfills those RMA's! They lose so much doing this, it boggles my mind.
Now let's look at why. Why would Google knowingly sell devices at a loss? It isn't exactly the best business practice to sell things and lose money on them. First, let's look at the developers. This phone is a "developers" phone. If you're developing for Android, you are probably using a Nexus to test your app and tweak it. When you're done developing your app, what do you do? Publish it in the Play store. All these "app stores" you see everywhere are huge cash cows, and they cost almost nothing to keep going. Throw an app store up, shave a little off the top of every purchase, and kick back while the money flows in. Secondly, and this is true for every company that sells anything, there is the reputation of the company/product. You make a solid phone and sell it for pretty cheap, you get happy customers. Happy customers tend to also be returning customers. I know people that buy iPhones simply because it's called "iPhone", and has the apple on the back of it. That's purely the reputation of the phone. They were happy with their previous phones, so they simply go to the updated version of it when they need to buy another one. I picked on iPhones because it's probably the most widespread example of this, plus it has to do with a phone, which is what we're talking about.
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R&D is done by the contractor, which I'm sure is already spent by the contractor since they build phones, the people manufacturing the phones are in sweat shop conditions so I don't think there paid much. My family does a lot of over seas manufacturing and you would be surprised at how much it really cost
Sent from my Nexus 4 using xda app-developers app
Tunderpimp said:
The nexus line is Googles way of thanking developers and phone enthusiasts, they are ones that buy the phone
Sent from my Nexus 4 using xda app-developers app
---------- Post added at 04:26 PM ---------- Previous post was at 04:21 PM ----------
R&D is done by the contractor, which I'm sure is already spent by the contractor since they build phones, the people manufacturing the phones are in sweat shop conditions so I don't think there paid much. My family does a lot of over seas manufacturing and you would be surprised at how much it really cost
Sent from my Nexus 4 using xda app-developers app
Click to expand...
Click to collapse
Not really. It's a consumer device in the same arena as the Galaxy series, however Google has failed miserably at advertising and pushing their product due in part to poor management. The same corporate structure that gives rise to things like AOSP is not the ideal format for selling items across multiple countries and cultures. They still cannot definitively say what the end goal is with the Nexus line. If they're trying to steer people into Google services then they need to figure out how to advertise and sell, which in this country means getting in bed with the carriers, and that will not change no matter how much these forums boast about prepaid plans. That doesn't even begin to get into the area of "open source" and how no one outside of this community gives a damn.
Sent from my Nexus 4 using Tapatalk 2
Hey all, found an interesting article which shows how much it costs to make a Galaxy Note 4. Based on production and RRP, It seems that the profit margin for Samsung seems to be similar or higher than that of Apple's overpriced iPhone 6+.
http://www.ibtimes.com/samsung-gala...ive-produce-iphone-6-teardown-reveals-1700769
So according to this article the iPhone 6+ base model costs $242 to make and sells for 859 dollars USD whilst the Galaxy note 4 costs $260 to make and sells for approx $800 USD
Now i know there is packaging, distrubution, R&D to take care of as well as retailer profit margins, but it is pretty save to say they are making a huge profit per device atleast from first time adopters, and so they should.
Edit: I am not complaining, just pointing out that it is not just Apple that makes them cheap and sells them at a high cost.
that article is rubbish, the research & development is free of cost, right? everybody knows that
entrarya said:
that article is rubbish, the research & development is free of cost, right? everybody knows that
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Click to collapse
Did you even read the article?
americasteam said:
Did you even read the article?
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Click to collapse
Or my post for that matter, which states that even with R&D costs the profit margin is quiet large. If they are aiming to sell a low amount of phones, let's say a million Note 4s, it would be reasonable to assume that 10$ a device would more than cover the 10 million dollar development cost which i just pulled out of my ass...why would it even cost 10 million USD to design a phone?
Also i presume when things are priced in the USA, they are priced excl VAT (or whatever the american equivelent is to british VAT), so yes there is 550USD worth of money to be made before R and D, packaging, distrubution and retailer profit margin.
In a competitive industry, the market drives the price not the cost of the item. If the cost is greater than the price the market is willing to pay the manufacturer may decide not to launch (unless they are still covering some fixed costs). If a consumer believes a device is earning an "excessive" profit they are free to find a phone that earns less profit. Or they can wait until the price drops. That is the beauty of the free market, the choice is yours.
And what about price od commercials, transport, and other?
Hey. If you want to build a comparable phone for cheaper for us, please feel free. At the end of the day, these companies produce a product that requires their capital and expertise to develop and build. We pay for the greater value and not for some equitable profit sharing with consumer equilibrium.
Unlike gaming consoles - Xbox 360/One Playstation 3/4 which sales their hardware at day one with loses that will be covered later on by the profit they'll make for games that they sell- in this industry sadly this is not the case and consumers are more then willing to pay double then a high end gaming console for the newest smartphone. Even though apps makes huge profits for the phone makers(let's say apple for example as they have their own phone and their own app store) they don't lower the costs as it's just extra earnings.
And you can definitely tell that the prices are way over priced when when companies such as Samsung, Apple and other big players in the phone market publish profits of BILLIONS a QUARTER.
hell, I'm not innocent as I buy these phones as well. But hopefully someday when the world will be floded with smartphones (including low markets/third world countries) and not only average to rich people will have them prices will drop.
tal123 said:
Unlike gaming consoles - Xbox 360/One Playstation 3/4 which sales their hardware at day one with loses that will be covered later on by the profit they'll make for games that they sell- in this industry sadly this is not the case and consumers are more then willing to pay double then a high end gaming console for the newest smartphone. Even though apps makes huge profits for the phone makers(let's say apple for example as they have their own phone and their own app store) they don't lower the costs as it's just extra earnings.
And you can definitely tell that the prices are way over priced when when companies such as Samsung, Apple and other big players in the phone market publish profits of BILLIONS a QUARTER.
hell, I'm not innocent as I buy these phones as well. But hopefully someday when the world will be floded with smartphones (including low markets/third world countries) and not only average to rich people will have them prices will drop.
Click to expand...
Click to collapse
I would say that the only way Samsung will be making money is by making this rather healthy profit margin on the phone, now we know it is quiet a decent margin. Who actually uses the Samsung app store? so no onwards profit there. All profits from Google Play will go straight to Google, so Samsung have just one time to make their cash from most people.
Given samsung recent financial outlook I think they could use as much profit as they can get.
Price equilibrium.
captainbirdseye86 said:
I would say that the only way Samsung will be making money is by making this rather healthy profit margin on the phone, now we know it is quiet a decent margin. Who actually uses the Samsung app store? so no onwards profit there. All profits from Google Play will go straight to Google, so Samsung have just one time to make their cash from most people.
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Click to collapse
I knew someone was going to jump and say that the funds are going to Google, and that's why I said that apps are billions worth of profits but just extra money(for Apple mostly and Google as well) however, a "healthy" profit it not a profit which they are making billions every quarter of it. That's insane. Most companies, even big ones, don't make those numbers in years, or ever for that matter.
They can cut the phones prices in half and still make great profits(that's what happens anyway when prices drop after a few months-so as you can see that's more than possible) but when a phone launches it has an insane price tag because these companies are based off making money and only money, and they have share holders to report to. They don't care about making a better phone, they only care about making money which results indirectly of us getting better phone bc that's the only way we will buy their product and not the competitioners.
Button line - they *can* lower the prices and make good profits, but they *won't* bc they want to make *more* money bc we are just willing to pay them those sums.
Welcome to capitalism.
For this logic, food in restaurant is also overprice. Even the burger in McDonald's is over price. Less than $2 of ingredients and they sell $5-$7.
WHERE THE HELL is the payment to staff and employees?
Look at ANY big companies balance sheet income statement and see how proportion of Administrative expense accounts for. Besides there are selling expense, and in production cost there are costs for factories and workers.
That's the aspect of Accounting, and in the aspect of Finance they have to take into account the interest (time value of money) on their investment,...
What the heck is materials cost? It's small in the cost structure of a company this type.
And if this is too complicated for you, this is more easier to understand. You guys think Samsung/Apple receive $500 for each of their phone? So if in one quarter SS sells 20mil flagship phones (Samsung easily can do), so the profit is $10 bill. However last quarter SS got the profit of over $4 bill. Where's nearly $6 bill? And need to say that the profit of Samsung also comes from middle to budget phones, tablets, TVs, semiconductors, display, fridge, washing machine,... So just for these 20mil flagship phones, if they sell at $250 lower price to "satisfy" some of you, they will lose $5 bill in revenue with (supposed to be) the same cost. And then they face loss. Basic maths.
i agree with hung remember samsung maintains factories too as well as build them (the latest one in development costs around 14 billion), of all the tech companies samsung outspends all of them. if they dont spend as much as others they can easily out-profit even apple every quarter (higher quarterly revenues) but like i said they build most of their parts thus they incur more costs too. i like to buy the notes simply because for the high price tag i truly believe that every year i have the best phone
hung2900 said:
For this logic, food in restaurant is also overprice. Even the burger in McDonald's is over price. Less than $2 of ingredients and they sell $5-$7.
WHERE THE HELL is the payment to staff and employees?
Look at ANY big companies balance sheet income statement and see how proportion of Administrative expense accounts for. Besides there are selling expense, and in production cost there are costs for factories and workers.
That's the aspect of Accounting, and in the aspect of Finance they have to take into account the interest (time value of money) on their investment,...
What the heck is materials cost? It's small in the cost structure of a company this type.
And if this is too complicated for you, this is more easier to understand. You guys think Samsung/Apple receive $500 for each of their phone? So if in one quarter SS sells 20mil flagship phones (Samsung easily can do), so the profit is $10 bill. However last quarter SS got the profit of over $4 bill. Where's nearly $6 bill? And need to say that the profit of Samsung also comes from middle to budget phones, tablets, TVs, semiconductors, display, fridge, washing machine,... So just for these 20mil flagship phones, if they sell at $250 lower price to "satisfy" some of you, they will lose $5 bill in revenue with (supposed to be) the same cost. And then they face loss. Basic maths.
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Thank you Hung, i am sure us mere simpletons on this forum much appreciate your valuable knowledge that you simplified just for us.
Please, teach us some more.
Not to mention the billion dollar bill in patent fees that Samsung calculated they owe Microsoft. Or their warranty and after sales support costs. The recognition engine for the handwriting features is licensed, royalties will be due. Codecs - not free. It all adds up, subtracting BoM from sales price is not how to calculate profit.
The OnePlus One can be so cheap because they mostly ignore the IP and support costs most non Chinese brand manufacturers pay.
- Research Cost
- Design cost
- Production Cost (material, labor and machineries plus Testing and QA/QC) - they dont do it in one shot. Based on test results, they might even go back as far as redesigning it and so on)
- Marketing cost (TV and print ads, Social Network, etc)
- Operating Cost - Samsung and any other companies have their core operating manpower. People doing the Human Resources, Accounting, Legal, Facility Maintenance, Warehousing/Inventory, Permits, etc. These groups are services groups and not profit center groups so they have to charge a portion of their operating expenses to each of those products to be sold.
There may be many more on top of that. Its not as simple as material and labor cost.
Good thing Samsung will be giving me back $200 with their phone trade in promotion.
What is all this argument about over priced note 4 and crapple fones?
lets get it straight, samdung's note series designs did not change much since day one. so no R&D costs there to recover.jus the hardware and other nuts and bolts. and TW,pfffff,it has been there since day 1,what else is new?????
What the consumers are actually paying for the is god damn knox counter and the equally obKNOXious app targeted at making sure the phone is secured/tampered free for enterprise users. other than alienating other dev, trying to be the king of douchebaggery, samdung is making damn sure to grab more money from consumers and making them pay for useless app (knox) which enterprise users shld pay.
as for crapple, they are known to sell overpriced everything since day one. money grabbing is not something new to crapple,its in their blood and every other else they do. consumers pay tons of dollars for their so called crapple environment and of course with each ios updates, they are making sure jailbreakers find it increasingly harder to get root access,thus ever raising in the game of douchebaggery.
you all can argue about overpriced this and that, end of the day, if you go buy their fone, you are jus validating their douchebaggery and making damn sure they trample on you when they deny your warranty when u root.
samdung is already fast becoming an overall king of douchebag, it will not be long before they catch up with crapple if consumers keep buying their knox infected fones.