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 $800 USD
Now i know there is packaging, distrubution, R&D to take care of as well as retailer profit margins, but it is pretty save to say they are making a huge profit per device atleast from first time adopters, and so they should.
Edit: I am not complaining, just pointing out that it is not just Apple that makes them cheap and sells them at a high cost.
that article is rubbish, the research & development is free of cost, right? everybody knows that
entrarya said:
that article is rubbish, the research & development is free of cost, right? everybody knows that
Click to expand...
Click to collapse
Did you even read the article?
americasteam said:
Did you even read the article?
Click to expand...
Click to collapse
Or my post for that matter, which states that even with R&D costs the profit margin is quiet large. If they are aiming to sell a low amount of phones, let's say a million Note 4s, it would be reasonable to assume that 10$ 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.
Click to expand...
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.
Click to expand...
Click to collapse
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.
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...
Click to expand...
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.
Click to expand...
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
Click to expand...
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.
Click to expand...
Click to collapse
Still I disagree about $50, there are actual documented break down of iPhone 4S hardware cost, is around $180, though the 5 is cheaper. Give the chinese slaves a break.
Sent from my R800x
Well here is the news Google partnered with lg because of the price as they are the only one who agreed to make phone at this price level. Its also get back lg to the market, despite their products are cool but their developers are sucks, lazy people wouldnt work on old devices to bring latest os so people like me promised won't buy lg product ever again, other company like Sony and Samsung refused Google to make smartphone with this spec for this price. But who cares about the partner as long as Google controls the os. I'm getting this as soon as it goes live for sale.
Sent from my Galaxy Nexus using xda app-developers app
Maybe Samsung doesn't want to create any more nexus phone just because of this. Their Galaxy S line and Note line will be ruined.
The same thing happens with the nexus 10, which is cheaper and FAR more specwise than note 10.1
Sent from my GT-I9100 using Tapatalk 2
qreffie said:
I think Google is taking the hit and selling it close to cost.
Click to expand...
Click to collapse
The iPhone 5 costs about 200$ (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
Click to expand...
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
Click to expand...
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.
Click to expand...
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.
Click to expand...
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 $, and now I'm stuck with no phone at all.
Click to expand...
Click to collapse
man, i feel you. i sold my gnex and my backup (g2x) device in anticipation of the nexus 4. I'm old and tired. So, i'm just going to go to my tmobile store and pick up a note 2. I got one for my wife last week and she has been completely satisfied with it. I'll re-evaluate the state of android in a couple months, whereby I might sell the note 2 to finally get the nexus 4. we'll see.
If you believe that its all a conspiracy, put your aluminum foil hat back on and go sit in the corner.
PincheKeith said:
This is what happens when things are under-priced. Whether mandated by law (price controls) or whether a company does it out of its own desire (Nexus 4). Selling something below its true value will lead to shortages because the demand will be too heavy. Combine that with Google probably trying to not overestimate the demand in order to not build too many, it should be no surprise that it sold out so quickly.
Click to expand...
Click to collapse
Finally someone who understand economics.
Put gas half price today. Guess what will happen. Even if gas stations prepared. EVERYONE will gas and you can't prepare for that. Supply is driven by how valuable it is to sell. Demand is determined by how much value you get. They released a 600$ 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.
Click to expand...
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.
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.
Click to expand...
Click to collapse
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.
Click to expand...
Click to collapse
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
Click to expand...
Click to collapse
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?
Click to expand...
Click to collapse
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.
Click to expand...
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
Click to expand...
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/
Click to expand...
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
Click to expand...
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
Click to expand...
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
Ok, not exactly note 4 specific, but involves it in an Overall business sense.
I just read where samsung has agreed to provide like 80% of the processors next year for Apple products.
These two have been spending billions and billions in court, are mortal enemies on the outside and mock each other daily, and this Is obviously not the first time, but Samsung is once again helping them behind the scenes .
It Amazes me Samsung shows an all out war with them to the public all the while supplying parts to the very products they are trying to beat.
Yeah I get the business side and it makes them money, but it's just in principle crazy.
''Im going to try and destroy your market share and sales, but sure I will make your products better"
?!?!
As a continuation of an earlier topic where I said Samsung's business was not doing well, here is some info from their last quarter :
- Samsung reported operating profits of 7.2 trillion won (approx. $7.1 billion USD), a 24 percent drop from the same quarter last year. It also missed analyst estimates of $8 billion USD.
Going by shipments of its smartphones, Samsung reported that is shipped 78 million units in the second quarter, down from the 87.5 million it shipped in the first quarter
sprintuser1977 said:
Ok, not exactly note 4 specific, but involves it in an Overall business sense.
I just read where samsung has agreed to provide like 80% of the processors next year for Apple products.
These two have been spending billions and billions in court, are mortal enemies on the outside and mock each other daily, and this Is obviously not the first time, but Samsung is once again helping them behind the scenes .
It Amazes me Samsung shows an all out war with them to the public all the while supplying parts to the very products they are trying to beat.
Yeah I get the business side and it makes them money, but it's just in principle crazy.
''Im going to try and destroy your market share and sales, but sure I will make your products better"
?!?!
Click to expand...
Click to collapse
Money talks, BS walk!
More than likely, Samsung Mobile and Samsung's chip production are two separate 'entities', so the chip manufacturer isn't competing with Apple directly. Their budget, projections, etc are all separately motivated, so a sale is a sale and revenue is revenue.
The pricing for these phones unlocked is ridiculous. ANd if you want it cheap you are binded under contract. That is why I have cricket. Got my awesome ZTE phone for 160 with no contracts. I have a friend that is still paying for his phone plus 120 dollars each month on phone bills. That is way too much!
teknoflipp said:
The pricing for these phones unlocked is ridiculous. ANd if you want it cheap you are binded under contract. That is why I have cricket. Got my awesome ZTE phone for 160 with no contracts. I have a friend that is still paying for his phone plus 120 dollars each month on phone bills. That is way too much!
Click to expand...
Click to collapse
I agree:thumbup:
You don't want to know how much the Marketing costs.....
The campaign for the iPhone 6, for example, cost Apple a meagre 850 million dollars. The one for the S6 was somewhere around 600 million.
Now guess who has to pay for that...
Not to mention, do you have any idea how much money is paid in patent fees to other companies for every device? Of your 700 quid phone, 400 quid goes to about 60 different companies for the use of about 600 patents. 200 alone are Microsoft's.
Then there's development costs. Loads of prototypes, trial and error.... And phones don't drop out of the sky, the developers, engineers, designers, r&d staff and everyone else involved has to get paid, too.
Then there's psychology. They tested this in the USA. Give people the option between two identical phones, one for 300 quid and one for 700 quid, and 93% will buy the 700 quid one.
Why? Image. They think a pricy phone makes them appear(and feel) more rich and accomplished. And because of that, they feel a cheaper phone is of a lower quality.
People are incredibly gullible and susceptible when it comes to outside appearances. They'd rather waste 400 quid so they can boast to everyone about how their phone was so very expensive. It makes them feel better.
How many times have we heard this argument: "You're just hating on Apple because you're too poor to buy an iPhone".
And that's why we pay ridiculous amounts for a smartphone: because that's what the masses want to pay.
Sent From My Samsung Galaxy Note 3 N9005 Using Tapatalk
Well, the poster above nailed it.
You should also add more factors:
Screen resolution is a gimmick. If you have more than 250PPI or 300PPI, you wont really notice the pixels, unless you facehug your phone.
Performance. From the qualcom S400, S600, S800 lineup, you will probably be set forever. Unless you are a gamer, you dont feel the difference.
Smartphone camera. Get a DSLR, you will do better pictures and get it cheaper instead of paying more for nothing.
RAM is the only good thing about new phones. Having more RAM is always better because you cannot expect the guys who develop apps to be careful enough to do the most basic thing and remove the most dangerous memory leaks or their apps eating huge chunks of memory.
Yeah marketing costs, but there are always phones with good price, quality and performance. Think about some Xiaomi, Lenovo, Jiayu....
In the UK carphone warehouse sell payg phones but their handsets are unlocked to all networks! Just have to buy a top up when you purchase the handset then you can use any sim, no extortionate sim-free prices!