this post was submitted on 23 Apr 2024
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[Dormant] Electric Vehicles
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You’re evading the tracking that provides the revenue offset of the slimmer margin. The more users that take that approach, the more expensive the hardware price point becomes.
I feel like this is going into different discussion but honestly, in this scenario, I don't really believe the subsidy of tracking really means anything here.
Out of curiosity, I looked up the production cost of some phones and googles pixel 6 pro, their flagship at the time, which cost google $485 to manufacture. They retailed for $899. Where is the saving from the money they're making from tracking? That's just the standard pricing range for phones of that tier. Its even cheaper for the base models. Phones are not exactly a low margin device from what I see here.
Source for what I said https://www.techwalls.com/production-costs-of-smartphones/
Funny enough, if you look at other brands, their margins are huge!
Exactly. There’s a smaller profit margin on Google hardware because they know they’ll recoup the lost margin with data-driven revenue. Apple has the highest margin and most user privacy.
As for the relative size of the margin, you have to account for a lot more than the parts and manufacturing cost that you see cited. Every model has its own payroll, R&D, market testing, marketing, packaging, and distribution to pay for with that profit.
I still don't really believe that tracking is offsetting cost all that much in these phones. Firstly, there's no data to suggest there's any saving is being done here. We can only speculate since nobody has release data on that point. But what we can look at is how google is pricing their phones relative to equivalent phones in their fields, which we can see is competitively priced but not too far from their competitors. If we ignore revenue from tracking, we still see significant margins and profit. That just goes to show that in this case any savings we can guess at from tracking doesn't need to be factored in. Googles competitive pricing can be more so attributed to its sheer size, already massive pool of software developers, ability to manufactory anywhere in the world to lower costs and ability to manufacture a limited amount of models of phones at a time to reduce cost and pool resources from its other departments. Nothing to me suggests that there is anything but other market forces at play that makes google act competitively.
Price comparisons of their phones: https://www.androidauthority.com/google-pixel-prices-1147281/