Ron Amadeo
Why is the Pixel Watch so costly? The machine’s $350 and $400 value tags are effectively above the closest comparable merchandise from Apple and Samsung, particularly contemplating Google’s first-generation smartwatches use slower, older components in comparison with different merchandise. The corporate is charging extra for much less, and whereas the Pixel Watch is a pleasant piece of {hardware}, it is laborious to make the worth make sense in comparison with sooner merchandise with higher components, just like the $250 Apple Watch SE and $280 Galaxy Watch 5.
Counterpoint Analysis‘s report particulars the Invoice of Supplies (BoM) for Google’s Pixel Watch, and involves the conclusion that the $400 LTE model machine prices $123 to construct. Firms all the time have to construct massive revenue margins into their merchandise to cowl R&D, labor, and different prices, and to justify the endeavor, however the $123 invoice of supplies reveals Google is simply charging greater than the competitors moderately than dealing with some form of provide chain drawback.
For comparability, we are able to have a look at Counterpoint Analysis’s final invoice of fabric estimate for the Apple Watch, which occurred in 2021 for the Apple Watch Sequence 6. The Sequence 6 had an MSRP of $400, the identical as this LTE Pixel Watch, however Counterpoint’s invoice of supplies had it costing greater than the Pixel Watch: $136. Similar to the way it feels available in the market, Counterpoint says Apple is providing extra look ahead to much less cash. Apple is an organization well-known for having the highest revenue margins within the business, but evaluating these estimates would give the Apple Watch a 66 p.c revenue margin, and Google a 69 p.c margin.
That does not even embrace the hidden price of the Pixel Watch: Google’s watchband bundling. Samsung and Apple allow you to purchase a watch physique after which choose the watchband you wish to pair with it, so that you solely pay for the watchband you wish to put on. Google compelled everybody to purchase the bottom-tier rubber watchband with the Pixel Watch (a $50 accent), and if you’d like a band in a greater model, that may price further. To make issues worse, the watch comes with three watch band halves to cowl massive and small wrists—you decide the dimensions you need and throw out the additional half. It looks like Google wished to chop down on the logistics of stocking a smartwatch, and that forces clients to pay further for watch band elements they do not want, and generates pointless e-waste.
Counterpoint Analysis
The report additionally offers a breakdown of the place Google is spending that $123, and It is not a lot totally different from the Apple Watch breakdown. Samsung will get a giant shoutout as one of many massive part winners within the Pixel Watch breakdown. The Pixel Watch options Samsung’s Exynos 9110 SoC and a Samsung modem, each manufactured at a Samsung Foundry, so Samsung accounted for 20 p.c of the whole BoM price. The 9110 is a 4-year-old chip, and Samsung’s personal watches provide the newer, sooner, extra power-efficient Exynos W920 for much less cash.
In second place is China’s favourite show producer, BOE, which scored 14 p.c of the BoM in response to this estimate. BOE provided the 1.2-inch OLED show and is the primary rival to Samsung’s show division these days. A typical criticism of the Pixel Watch is the massive display screen bezels, which might have been mounted with a greater show provider.
Whereas the Pixel Watch is overpriced, that is, no less than, a fixable drawback. The second-generation watch—hopefully Google builds a second-generation watch—must be priced according to the competitors with specs to match. Google must let individuals purchase solely the watch bands they wish to reduce down on hidden prices and e-waste. The corporate additionally must get its rebooted Put on OS ecosystem to an honest state, although it is making progress on that daily. We’re additionally nonetheless ready for these steel bands to launch, which is able to occur someday this spring.
