The manufacturing cost of the Google Pixel XL is on par with that of the iPhone 7 Plus and Samsung Galaxy S7 edge, according to UK-based research company IHS Markit, which is not all that surprising. From the get go, Google priced the Pixel to directly compete with the iPhone and high-end Android flagships, ditching the somewhat mid-range pricing model it employed for Nexus devices.
According to a preliminary teardown estimate from IHS Markit, the bill of materials (BOM) cost for the 32 GB Pixel XL comes to $285.75. Since the 5.5-inch Pixel starts from $769, at first glance it may seem as though Google is pulling some $484 in clean profits from the phone. However, to its $285 BOM estimate, we have to add R&D costs, marketing costs, as well as various administrative expenses, in order to arrive at a Google’s true profit from the Pixel XL. Despite the unknowns in the equation, IHS notes that the direct manufacturing cost-to-sales-price ratio of the phone is completely in line with those of direct competitors, such as the iPhone 7 Plus and the Galaxy S7 Edge.
Contrary to many preliminary predictions, the Pixel and Pixel XL, which are the first phones to carry the company’s brand name, are rivaling high-end products by Google’s own Android ecosystem partners. In that sense, the new Pixel lineup of smartphones is a departure from the Nexus brand, as Google is now employing a strategy of vertical integration of hardware and software, similarly to Apple.