Smartphone manufacturers aren’t in this game out of the goodness of their hearts, and when you go to all the trouble of designing, building, and marketing a top-tier handset, you certainly expect to turn a healthy profit. Of course, there’s healthy profits, and then there are phones that are practically licenses to print money, so it’s understandable that when you’re shelling out hundreds upon hundreds of dollars to pick up the latest hardware, shoppers can be pretty curious just how much of their smartphone-buying dollar is actually paying for that new phone, and how much is profit margin. A new breakdown attempts to work out just what it cost Samsung to make one of this season’s hottest new smartphones, the flagship Galaxy S7.
Go shopping for the Galaxy S7 right now, and you’ll probably pay about $700 for the phone (unless you find a hot deal): steep, sure, but not at all out of character for a phone of its stature. Some of that money will go to the retailer, some helps offsets Samsung’s massive advertising expenditures, but as for the hardware itself, it looks like only about $255 of that $700 is paying for actual phone.
Where does all that $255 go? Well, putting the phone together only costs Samsung about $5, with the rest going to hardware costs, one of the steepest of which is the Snapdragon 820 SoC powering the handset – Qualcomm gets just over $60 for the chip. This breakdown only deals with the 820-powered version of the phone, it’s worth noting, and Samsung might enjoy even higher profits when using its own in-house Exynos SoC on GS7s in other markets.
Another component going under the magnifying glass here is the GS7’s main camera, which costs the manufacturer about $14 – but again, we’re looking at a company that uses components from multiple sources, so we’re not sure just which camera module that means. Differences like that make these figures a little loose, but they still give us a pretty general sense for what the phone costs – and no matter which way you slice it, it’s a handset that’s selling for more than double what it costs to make.
How’s that compare to other flagships? The same analysts who prepared this GS7 breakdown also looked at the iPhone 6s and iPhone 6s Plus when they came out last year, and those appear to cost Apple about $212 and $236 to make, respectively.
Of course, none of this is even touching upon things like software or patent licensing, all of which eats in to Samsung’s profit margins – so don’t start getting too indignant about what you just paid for your GS7. Maybe the most important question to ask is whether or not the Galaxy S7 feels to you like a phone worth that $700 asking price.