Samsung Galaxy S8 • Other Disadvantage
  • 1
  • 0
Galaxy S8 phone with 100 euro bills

The S8 gets a premium launch price, but it's not unexpected. You want the latest and most anticipated high-end smartphone, you'll have to pay a premium price for it. I've just read about the Samsung Galaxy S8 (SM-G950N) preliminary BOM and manufacturing cost and according to that data, BOM + manufacturing of the Samsung Galaxy S8 costs $307.5 (at the time that that paper was published). For example, the S8 touchscreen Total BOM cost is $85, the Exynos 8895 chipset costs $45, the 64GB NAND memory and the 4GB DDR4-3733 cost $41.5, the camera modules for the front and rear cost $20.5 and the bundled power supply and the bundled power supply charger, the AKG headset and everything included in the box including the cables, adapter, etc, all cost $15 (source).

The preliminary BOM estimates in this top cost driver report refers to this Samsung Galaxy S8 64GB Korean model SM-G950N. Now, looking at the price shown on samsung.com in the Korean language, it states the price of 1,028,000 South Korean Won, which is around $915 (as of May 24th, 2017). In the US, the Samsung Galaxy S9 sells for $724.99 according to samsung.com website and on amazon.com as of that date the S9 g4GB unlocked version sells for $736.88 (International version, Midnight Black).

Now if we take that lowest price $724 and reduce the total cost estimates that mentioned in that report, we can see that we are talking about around $416 profit. I've read many comments from people who were frustrated seeing such a high price tag, and mentioned that the S8 initial launch price is $100 than the S7 was when it was first launched (for the 64GB in this case). I think that the Apple's margin is much higher than this. The thing is that we, the customers, pay a lot for a premium device, although the price to manufacture it is around 2.5 cheaper. No doubt that this premium phone prices are the main revenue for those companies because the marginal profit from these devices is very high. People who buy these phones are those who want to enjoy the best and latest and will buy the phone in its highest pick price. Other customers will either wait for the price to get down or just buy a cheaper more affordable smartphone.

It's not that I'm surprised to see the relatively low bill of materials (BOM) and the assembly cost for smartphones. I am surprised when I see that there is such a huge gap between the BOM and manufacturing cost and the price customer actually pay for the device. In some countries the S8 costs even more than that price, based on the country, currency, etc.

The Samsung Galaxy S8 will definitely stay out of reach for many people because of its high price tag. Just keep in mind that those prices are estimates by IHS Markit and they might be slightly different from what was published in that report. That being said, I've read articles on several websites that all mentioned a cost of manufacturing and bill of materials (components) around $300 or slightly more. This price is also said to be around $43 higher than that of the Galaxy S7. The S8 costs around 20% more to manufacture and this is something to take into account.

Here is an interesting chart from statista that shows the production costs of some of the latest and more popular high-end smartphones, including the Apple iPhone 6S, iPhone 6s Plus, Galaxy S7, Galaxy S7 edge, Huawei P9, Apple iPhone 7, Google Pixel XL and the Samsung Galaxy S8.

Infographic: Samsung's Galaxy S8 Is Expensive to Build | Statista You will find more statistics at Statista

As you can see, the Apple iPhone 7 basic manufacturing costs and bill of materials costs a total of $224.8. Just to remind you, as of the time of writing, the iPhone 7 sells for around $650 for the 32GB, $750 for the 128GB and around $850 for the 256GB (approximate prices, price may vary). You can now understand why Apple is such a profitable company, because the profit margin from their iPhone devices is higher than its competitors. The price it takes to manufacture an iPhone device is much lower than its competitors. Add the data from the brand retention that shows 92% retention compared to Samsung's 77% (source), you can see why Apple is dominating the smartphone market in terms of profit. People who buy Apple phones are more likely to continue buying another iPhone when they upgrade.

The Samsung Galaxy S8 price is certainly something that will put off many buyers, but it won't hold off those who want the best Android smartphone money can buy.

importance ranking: #3 in the 'Other' category and #45 among all categories for Samsung Galaxy S8 device

User Opinions

0 Comments