Samsung is selling its latest flagship mobile phone Galaxy S5 at an average price of $660 (RS 51,500 In India) across the globe. However according to the analysis of the market research firm IHS, it takes only $256 for Samsung to produce the Smartphone. According to IHS cost of components or the total bill to buy the components is just around $256.
If the net profit of Samsung is calculated considering only the hardware of flagship galaxy S5, Samsung would be making a huge profit of almost $404. The profit is almost 60% (61.21% to be exact). However this is not all Samsung would get out of the phone. Other costs are not considered. Marketing, employee salaries, software (don’t forget TouchWiz UI), research and labor. This factors altogether have a major share in profits. If all these factors are considered then the net profit for Samsung from Galaxy S5, drastically reduces.
The following is the cost of parts embedded in Galaxy S5
- The Screen cost $63 (Most costly).
- Memory chip (RAM and flash memory) $33.
- Finger print scanner $4, as compared to iPhone’s fingerprint scanner chip of almost $15.
- Heart rate monitor cost’s Samsung merely $1.45 (Samsung has mounted heart rate monitor on two of its new wearables).
Don’t forget, Samsung is the biggest subsidiary with 427000 employees, and their salaries do eat up most of the company’s profits. Some of the other costs include transport expenses, marketing. And not to mention, Samsung invests lot of its money, fighting for patent lawsuits (against Apple).
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