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While I have no hard figured I believe the cost difference is because Google is probably selling these devices at or around there cost. They are selling them (l

While I have no hard figured I believe the cost difference is because Google is probably selling these devices at or around there cost. They are selling them (like how amazon does with their tablets) as content delivery systems. Simply as a way to get more people to into the google ecosystem. Other companies must sell their devices to make a profit, google does not. As long as they are close to making even on device cost they can make up for and exceed it elsewhere.

icebraining 14y ago
But Google doesn't make the devices, LG does.
mattmanser 14y ago
I thought Apple's app store makes a fraction of what they make on the phones? Although Google's profit's are in the billions, so are their users. Their profit per user is actually pretty small to be running an at a loss hardware device. And we can't pretend that people don't use their ecosystem on other devices anyway. I honestly have no clue at what Google are trying to achieve sometimes. I mean it makes sense for Amazon, but Google? Not so much.
- Retric 14y ago
  Last I checked it was the other way around, iTunes and the App store are basically run at cost to get people to buy more devices.
  - jonknee 14y ago
    No, but the profit made is tiny in comparison to the giant margins they make on iOS devices ($700 iPhones that cost $175 to make really pad the bottom line).
    - _djo_ 14y ago
      It does not cost $175 to make, that's just the estimated bill of materials (BOM) cost. The actual cost to manufacture includes labour, design, shipping, testing, storage and dozens of other things. Apple's gross margins on its devices, essentially the selling price less the manufacturing costs, is about 30-40% company-wide. That translates into an operating margin (which includes all costs) in the 20-30% range. That's high for a consumer electronics company, but not as high as the $700 - $175 comparison makes it sound.
      - jonknee 14y ago
        > Apple's gross margins on its devices, essentially the selling price less the manufacturing costs, is about 30-40% company-wide. That translates into an operating margin (which includes all costs) in the 20-30% range. Of course there are other expenses (those $10M Apple Stores don't build themselves), but you're incorrect about the operating margin. For Q4 2012 AAPL had an operating margin of 34% (gross margin was 40%).
        _djo_ 14y ago
        The last figures I saw matched what I put in my post, though they may be older than I realised. Thanks for the correction.
      - RShiki 14y ago
        The entry level, 16gb iPhone has a profit margin that is bigger than average, but not huge. The 64gb iPhone on the other hand.. it's like printing money. The markup doesn't even begin to compare to what the bigger storage actually cost to Apple. Apple makes a LOOOOT of money out of the customers who have bigger needs than average. That's been Apple's strategy forever, people who want more have to pay a lot more than what it's really worth. I can remember the entry level iBook (during the PPC days) being sold with goddamn combo DVD reader/CD writer drives in a time where EVERY SINGLE PC LAPTOP SOLD, even the cheapest crap, had a DVD writer. Just to push people onto the higher profit margin. I love Apple products but they really know how to milk their customers dry. Hacker News's audience wouldn't fall for that, but I can remember the markup on ram, when they still sold devices with 1 or 2gb of ram when the competition had 4gb on their cheapest stuff, with huge markups on the online apple store if you ordered a laptop with more ram. People here know how to put more ram in their computers and know not to order a macbook with "Apple's ram" (... a traditional thing that is going to die with the retina mbp and its soldered ram), but the average joe just got ripped off hardcore. If you only look at their entry products, like the 16gb iPhone, the 21" iMac, the 11" MBA, yeah, Apple seems reasonable. Any other Apple product ? the margins on those things is something no one else could pull off without getting lynched.
- deleted 14y ago
  [deleted]
- MaxDPS 14y ago
  I think it makes sense for Google because the more devices they have in the wild, the more advertisements they can serve. Also, the more data they can get from users (location/maps/statistics). And I very much doubt that they are selling these at a loss. More like breaking even.
ImprovedSilence 14y ago
But you can't buy one of these through verizon, you have to pay the full price. Most people will still get the other phones at the "discounted" price after 2 year contract.... It just seems like the path of least resistance for the consumer.

icebraining 14y ago

But Google doesn't make the devices, LG does.

mattmanser 14y ago

I thought Apple's app store makes a fraction of what they make on the phones? Although Google's profit's are in the billions, so are their users. Their profit per user is actually pretty small to be running an at a loss hardware device. And we can't pretend that people don't use their ecosystem on other devices anyway. I honestly have no clue at what Google are trying to achieve sometimes. I mean it makes sense for Amazon, but Google? Not so much.

Retric 14y ago
Last I checked it was the other way around, iTunes and the App store are basically run at cost to get people to buy more devices.
- jonknee 14y ago
  No, but the profit made is tiny in comparison to the giant margins they make on iOS devices ($700 iPhones that cost $175 to make really pad the bottom line).
  - _djo_ 14y ago
    It does not cost $175 to make, that's just the estimated bill of materials (BOM) cost. The actual cost to manufacture includes labour, design, shipping, testing, storage and dozens of other things. Apple's gross margins on its devices, essentially the selling price less the manufacturing costs, is about 30-40% company-wide. That translates into an operating margin (which includes all costs) in the 20-30% range. That's high for a consumer electronics company, but not as high as the $700 - $175 comparison makes it sound.
    - jonknee 14y ago
      > Apple's gross margins on its devices, essentially the selling price less the manufacturing costs, is about 30-40% company-wide. That translates into an operating margin (which includes all costs) in the 20-30% range. Of course there are other expenses (those $10M Apple Stores don't build themselves), but you're incorrect about the operating margin. For Q4 2012 AAPL had an operating margin of 34% (gross margin was 40%).
      - _djo_ 14y ago
        The last figures I saw matched what I put in my post, though they may be older than I realised. Thanks for the correction.
    - RShiki 14y ago
      The entry level, 16gb iPhone has a profit margin that is bigger than average, but not huge. The 64gb iPhone on the other hand.. it's like printing money. The markup doesn't even begin to compare to what the bigger storage actually cost to Apple. Apple makes a LOOOOT of money out of the customers who have bigger needs than average. That's been Apple's strategy forever, people who want more have to pay a lot more than what it's really worth. I can remember the entry level iBook (during the PPC days) being sold with goddamn combo DVD reader/CD writer drives in a time where EVERY SINGLE PC LAPTOP SOLD, even the cheapest crap, had a DVD writer. Just to push people onto the higher profit margin. I love Apple products but they really know how to milk their customers dry. Hacker News's audience wouldn't fall for that, but I can remember the markup on ram, when they still sold devices with 1 or 2gb of ram when the competition had 4gb on their cheapest stuff, with huge markups on the online apple store if you ordered a laptop with more ram. People here know how to put more ram in their computers and know not to order a macbook with "Apple's ram" (... a traditional thing that is going to die with the retina mbp and its soldered ram), but the average joe just got ripped off hardcore. If you only look at their entry products, like the 16gb iPhone, the 21" iMac, the 11" MBA, yeah, Apple seems reasonable. Any other Apple product ? the margins on those things is something no one else could pull off without getting lynched.
deleted 14y ago
[deleted]
MaxDPS 14y ago
I think it makes sense for Google because the more devices they have in the wild, the more advertisements they can serve. Also, the more data they can get from users (location/maps/statistics). And I very much doubt that they are selling these at a loss. More like breaking even.

ImprovedSilence 14y ago

But you can't buy one of these through verizon, you have to pay the full price. Most people will still get the other phones at the "discounted" price after 2 year contract.... It just seems like the path of least resistance for the consumer.