Samsung’s Galaxy S5 Costs About $256 to Build

Redemption80

2014-04-18 19:20

While Apple clearly make more profit per phone, i don't think it's anywhere near like what people think. Samsung are involved in just as much cheap labour as Apple is, and while their margins are not as high as Apple's they nothing more than a slightly less annoying version of Apple when it comes to profits and selling phones via marketing rather than anything real. These days i'm more of an HTC fan, build quality and software is so much better on the One M8, i've even heard the camera seems to be better all round than the S5, not surprising as most of us know the megapixels amount is just there to sell cameras to people who know nothing about cameras, and only becomes important if you need to zoom or crop the image.

#4803113

Neo Cyrus

2014-04-18 21:14

Mine on a 2 year contract cost... $621.50 before $195 credit I had with my provider reducing it to $426.50. Of course they also wanted to charge an extra $25 "upgrade" fee, which I had them drop. Why? Because my contract doesn't cost $80 a month. That's pretty much how all of them here work. On an $80 a month contract for 2 year it'd be $282.50. $339 difference. But that's nearly $900 less per year for my contract. Only reason I would pay such an insane price on a 2 year contract is because that phone number (of the 3 on the account) wasn't leaving that provider so signing up for the contract actually didn't make me lose anything. $426 ends up being less than then 32GB Nexus 5 I wanted which was marked as "In sock ships in 5 weeks". I guess the moral of the story is that if you're in Canada prepare to be raped on phones and contract prices. Best part about all this is, I'm still waiting for my S5 to arrive even though it should have a week ago. According to their website I'm still #65 in line on the reserve list. Classy. Oh and I really don't believe it costs $256. I'd be anything each unit ends up costing Samsung significantly less.

#4803150

buddybd

2014-04-18 22:29

Apple also pay little tax, notoriously so. It's way past the point of being disgusting.

Oh don't worry, all our favorite tech firms do the same. Let's not single out Apple on that one. http://www.forbes.com/sites/christopherhelman/2014/04/15/what-americas-most-profitable-companies-pay-in-taxes/

#4803152

Clouseau

2014-04-18 22:32

The $256 build cost is right in the ball park. Manufacturers usually want at least one full turn on their cost. That now elevates the price to $512. Giving a conservative markup of 25%, brings the price to $640. Not shocking at all.

#4803281

zzzaac

2014-04-19 04:43

These days i'm more of an HTC fan, build quality and software is so much better on the One M8, i've even heard the camera seems to be better all round than the S5, not surprising as most of us know the megapixels amount is just there to sell cameras to people who know nothing about cameras, and only becomes important if you need to zoom or crop the image.

Having got the M8 and do a comparison, the camera on the M8 is better than the S5 at Low Light, I found that the S5 is the best all rounder out of the two. The M8's camera is just too inconsistent, something that the Verge and Cnet mentions

#4803287

lucidus

2014-04-19 04:56

The cost to build is $256, but then you have shipping costs, wholesaler costs, retailer costs, transportation between wholesaler and retailer, maybe importer costs, tax, and so on. If it costs you $600, Samsung certainly isn't getting a $344 profit. Not sure how much they're get, but it would only be a small fraction of that $344. Apple would make much more money on their iPhones, since they are notorious for cheap labour, sub-par working conditions, and they control the supply chain from manufacturer to their stores. If they sell the iPhone for $600, they would be getting the bulk of that $400 difference. Apple also pay little tax, notoriously so. It's way past the point of being disgusting.

Don't be that guy. Oh, sorry.

#4803291

IcE

2014-04-19 05:30

The $256 build cost is right in the ball park. Manufacturers usually want at least one full turn on their cost. That now elevates the price to $512. Giving a conservative markup of 25%, brings the price to $640. Not shocking at all.

Nope, perfectly reasonable. The people who designed, engineered, and marketed the phone deserved to be paid for obvious reasons.

#4803355

NAMEk

2014-04-19 10:31

Nope, perfectly reasonable. The people who designed, engineered, and marketed the phone deserved to be paid for obvious reasons.

I doubt they do. Usually most of the profit goes to few people who are chairmen or directors or any one in the top. Btw profit is huuuge. Don't stand up for samsung, they aren't worth it.

#4803381

Loobyluggs

2014-04-19 12:25

Not seeing a problem with this, they did have a large legal bill to pay Apple for IP infringement, unless I got that wrong?

#4803382

Kaarme

2014-04-19 12:30

Whatever the warranty return percentage of the phone might end up being, it will also reduce the profit somewhat per phone. Ironically enough the cheaper the components and assembly and thus the larger the margin, the more it will cost in warranty expenses. Although I'm sure all phone makers are experts at optimising a phone's quality so that it will statistically break only after the warranty has just expired. Good for business.

#4803572

makaveli316

2014-04-19 21:56

Wow, you guys in the U.S. are really f'd up. 100$+ for a plan? Seriously, this is beyond getting it in the butt. I'm getting the S5 next week for 45€ a month with everything included, free calls + sms to anyone, LTE 4G 2Gb and 300mb roaming data.

#4803579

eclap

2014-04-19 22:17

Wow, you guys in the U.S. are really f'd up. 100$+ for a plan? Seriously, this is beyond getting it in the butt. I'm getting the S5 next week for 45€ a month with everything included, free calls + sms to anyone, LTE 4G 2Gb and 300mb roaming data.

You sure that's on the same length contract as that $100 contract?

#4803591

IcE

2014-04-19 22:38

I doubt they do. Usually most of the profit goes to few people who are chairmen or directors or any one in the top. Btw profit is huuuge. Don't stand up for samsung, they aren't worth it.

So you imply they're working for free? :3eyes: They're part of the overhead of running a business, not an optional expense..

#4803606

Denial

2014-04-19 23:00

Wow, you guys in the U.S. are really f'd up. 100$+ for a plan? Seriously, this is beyond getting it in the butt. I'm getting the S5 next week for 45€ a month with everything included, free calls + sms to anyone, LTE 4G 2Gb and 300mb roaming data.

No, there are plenty of contracts that are sub $100. I pay $70 for unlimited everything.

#4803683

FerCam™

2014-04-20 01:01

wut. When these type of breakdowns first got posted, literally the exact opposite was said. People were convinced that Samsung was making $400 on each phone. Hell just go read the reddit/r/android thread where this was posted. Almost 90% of the initial posts were people complaining about the cost of smartphones and that Samsung makes too much money. Also if you actually had read the entire report (which is behind a paywall unfortunately) they show how they arrived at the total cost with actual sources. As oppose to just pulling a number like "$100 if not less" out of thin air.

And you still believe in santa and everything they say, a tip: like someone already said in this thread samsung is a vertical manufacturer they can supply themselves. And for me it's the same don't like smartphones I have a PC for something just need something that makes phone calls. Besides that it's mostly rich people who buys them to show-off, so samsung should "scam" them even more.

#4803693

yasamoka

2014-04-20 01:16

And you still believe in santa and everything they say, a tip: like someone already said in this thread samsung is a vertical manufacturer they can supply themselves. And for me it's the same don't like smartphones I have a PC for something just need something that makes phone calls. Besides that it's mostly rich people who buys them to show-off, so samsung should "scam" them even more.

Funny stuff, really. Pity you have to label others because you don't have a smartphone and they do, then top it all off by wishing they be "scammed" by a company making money. It's funny that a minority in a minority of hardware & gaming enthusiasts, with the specs you have, is labelling the hundreds of millions of people who own smartphones "rich people who buy them to show-off". What part of your body did you pull the $100 figure out of, exactly? You also don't seem to have anything useful to add except ride on the hatewagon? Next stop is not too far.

#4803717

Clouseau

2014-04-20 01:57

Deleted

#4803725

Clouseau

2014-04-20 02:05

Deleted

#4803739

Denial

2014-04-20 02:38

And you still believe in santa and everything they say, a tip: like someone already said in this thread samsung is a vertical manufacturer they can supply themselves. And for me it's the same don't like smartphones I have a PC for something just need something that makes phone calls. Besides that it's mostly rich people who buys them to show-off, so samsung should "scam" them even more.

tip: Read the report. Where it literally says that Samsung's internal units sell to one another and that's where they pulled the pricing from.

#4803760

Clouseau

2014-04-20 03:17

tip: Read the report. Where it literally says that Samsung's internal units sell to one another and that's where they pulled the pricing from.

GAAP dictates when preparing consolidated financials, all profit recorded from the sales to or from subsidiaries, downstream or upstream sales, are to be removed; commonly refered to as eleimination entries. The elimination entries get even more complicated if the subsidiary is not 100% owned. Reason being that the transactions are considered just a transfer/exchange of assets. So if a company can supply themselves cheaper than a competitor, it would be beneficial for them to do so. It's a typical "What if?" scenario.