The Pixel Watch’s bill of materials estimate can’t explain the high price – Ars Technica

Why is the Pixel Watch so expensive? The device’s $350 and $400 price tags are much higher than the closest comparable products from Apple and Samsung, especially considering that the first generation of Google’s smartwatches used slower and older parts compared to other products. The company charges more for less, and while the Pixel Watch is a great piece of hardware, it’s hard to make the price reasonable compared to faster products with better parts, like the $250 Apple Watch SE and $280 Galaxy Watch 5.

Counterpoint ResearchA Bill of Materials (BoM) report details Google’s Pixel Watch, coming to the conclusion that the $400 version of the LTE device costs $123. Companies always need to build big profit margins into their products to cover research and development, labor and other costs, and to justify the endeavor, but a $123 bill of materials shows that Google is overcharging the competition rather than having some kind of supply chain problem.

For comparison, we can take a look at Counterpoint Research Recent bill of materials An estimate for the Apple Watch, which happened in 2021 for the Apple Watch Series 6. The Series 6 had an MSRP of $400, the same price as an LTE Pixel watch, but its Counterpoint bill of materials cost more than the Pixel Watch: $136. Just like how it feels about the market, Counterpoint says Apple is offering more watches for less money. Apple is a company that is famous for having it The highest profit margins In the industry, however, comparing these estimates would give the Apple Watch a 66 percent profit margin and Google a 69 percent profit margin.

This doesn’t even include the Pixel Watch’s hidden cost: Google’s watch strap assembly. Samsung and Apple let you buy the watch case and then select the watch band you want to pair it with, so you only pay for the watch band you want to wear. Google forced everyone to buy a bottom-tier rubber watch band with their Pixel Watch ($50 accessory), and if you want a band with a better style, it costs extra. To make matters worse, the watch comes with three Watch strap in half to cover large and small wrists – you choose the size you want and subtract the extra half. Google apparently wanted to cut back on the logistics of storing a smartwatch, and that forces customers to pay extra for watchband components they don’t need, and that creates unnecessary electronic waste.

The report also gives a breakdown of where Google spent $123, not much different from the Apple Watch breakdown. Samsung gets a huge shout out as one of the big winners for the Pixel Watch. The Pixel Watch features a Samsung Exynos 9110 SoC and a Samsung modem, both of which were made at Samsung Foundry, so Samsung accounted for 20 percent of the total BoM cost. The 9110 is a 4-year-old chip, and Samsung’s own Exynos W920 watches offer the newer, faster, and more power-efficient ones for less money.

In second place is China’s favorite monitor manufacturer, BOE, which has a BoM score of 14 percent according to this estimate. BOE supplied 1.2 inch OLED screen which is the main competitor of Samsung display division at present. A common criticism of the Pixel Watch is the large screen bezels, which could have been fixed with a better screen supplier.

While the Pixel Watch is overrated, at least that’s a solvable problem. The second-generation watch — hopefully Google will make a second-generation watch — should be priced in line with the competition with matching specs. Google needs to allow people to only buy the watch bands they want to reduce hidden costs and e-waste. The company also needs to get the Wear OS ecosystem back into a decent state, though make progress on it every day. We’re still waiting for this metal bands release, which will happen sometime this spring.