Samsung Follows Apple’s Wide Profit Margins Strategy – S6 Edge Even More Profitable
Industry and Samsung's loyal fans have been celebrating tech manufacturer's latest success with its launch of Galaxy S6 and the S6 Edge. While we have been completely focusing on the design of the new gadgets, Samsung has apparently followed in the footprints of its rival Apple when it comes to getting more profits per unit sold, indicates latest report.
Samsung profits with wide margins:
New report from the research and analysis firm IHS indicates how Sammy has borrowed from Apple's strategies when it comes getting more profits from fewer devices. It is the first time Samsung has introduced the unibody design to the flagship Galaxy S line. Which practically means that you cannot have access to either the batteries or the memory cards.
This might be a little annoying to consumers but this strategy has helped Apple's skyrocketing profits for years. Because the company gets complete control on the memory allocated with the sealed design, users are left with no option but to opt for pricier models with increased memory.
Having sealed smartphones, Samsung - much like Apple - tagged the models with $100 price increment for each increased memory capacity. Which means that the 64GB Galaxy S6 will be $100 more expensive than the 32GB variant and 128 GB $200 higher than the base variant.
Is installing more memory in a device really that expensive?
The report reveals that it costs Samsung only about $13 more per unit to build a 64GB Galaxy S6 or S6 edge and less than $26 to build a 128GB variant giving Samsung over $87 more profit per unit for the 64GB device.
It is not very odd to find this pricing mechanism as Apple has been doing the same for years now - even getting more in profits than what Samsung is doing this year.
While the $799.99 retail selling price for that device [64GB Galaxy S6 edge] leaves plenty of room for Samsung to make money, IHS notes that Apple’s comparable iPhone 6 Plus with 64 gigabytes of memory costs about $50 less to manufacture — and retails for $50 more — than Samsung’s device.
How else is Samsung profits seeing a huge increment this year...
It is not just about the memory thanks to sealed smartphone design this year that is helping Korean tech giant making huge profits. The latest report also reveals that while Samsung Galaxy S6 edge costs only $24 more per unit to build, Samsung is selling the device for $100 more! Add in the memory increments, and Samsung is in for some huge profits especially from the dual-curved smartphone. It must be quite upsetting for Samsung then to have failed how crazy reception it will receive for the S6 edge having fewer left in stocks.
The research report also revealed that Samsung Galaxy S6 edge is the most expensive flagship Samsung has ever built coming along at an approximate price of $290.45 per unit including all the components fitted inside it.
Well, good luck to Sammy and its investors for finally having one great year. We customers have to pay whatever these tech giants ask us to, anyway.
- Source: The Wall Street Journal