Samsung's latest flagship smartphone, the Galaxy S7, is now available across several retailers and via carriers in the U.S. The Android-powered handset commands quite a steep price, costing $650 to $700 for the unlocked variant, and is available in three hues.
While the Galaxy S7 may not retail for cheap, unless you opt for a two-year contract, have you ever wondered what it costs Samsung to make the smartphone? It costs Samsung just $255 to make the Galaxy S7, which is a profit of over two and a half times on each unit sold, or so it would seem.
The details on constructing the Galaxy S7 have emerged thanks to the handset's bill of materials (BOM), which basically lists pretty much all the components Samsung has deployed for the smartphone, including the associated costs. The BOM for the Galaxy S7 totals to $255 worth of materials as revealed by research firm IHS Technology.
The $255 BOM for the Galaxy S7 is interestingly just $1 cheaper than the BOM for the older-gen Galaxy S5.
According to a teardown analysis by IHS, the Qualcomm Snapdragon 820 chipset that powers the U.S. variant of the Galaxy S7 is the most expensive component on the smartphone and is estimated to cost Samsung $62.
The report also reveals that the 12-megapixel camera that boasts the Dual Pixel technology, costs Samsung $14. The finishing touches on the Galaxy S7 only cost $5.
Before one jumps the gun and accuses Samsung of tripling its margins, one needs to remember that a smartphone has more components involved than just the build. This means it's not merely restricted to the cost of materials used to create the device.
Samsung has to incorporate costs for several other aspects that go towards making the Galaxy S7 or any other smartphone. What are these you ask?
For starters, Samsung has to invest in machines that will manufacture the handsets. These machines need to be placed in massive buildings, which in turn translates to additional overheads. The company needs to pay for the rent and the power for the machines. It also has to pay for manpower – the employees who will operate these machines.
More importantly, Samsung has to employ top-notch engineers (and pay them handsomely) so they can carry out research as well as design the components of the smartphone.
Samsung also needs to conduct aggressive marketing campaigns to promote its smartphones. This requires a marketing team that creates advertising campaigns and devises strategies to promote the Galaxy S7 or any other phone from the company. It doesn't end there. Samsung also has to shell out money for ad time and space.
On top of all that, the company also has the responsibility for the smartphone's worldwide distribution, which is, again, an added cost.
Of course, these are all the reasons why the Galaxy S7 comes in great value. So before deciding to buy the latest flagship of your choice, it's a good thing to think about where every bit of your money is being distributed. If you've chosen Samsung's latest flagship, here are details to know where to grab it.
Photo : Andri Koolme | Flickr