Very good point. It really makes you wonder: if Google can make a profit on such an overall-good phone at $400 (I have to assume that they aren't just taking a huge loss on every phone, though I suppose that could be a strategy to garner marketshare), and Apple has even shown that they historically can make a profit at $350 with the iPhone SE... what on earth is in the X/XS to justify the $1k price? Stainless steel? Maybe, but even the 4/4S had that. OLED? On the 3a, at a similar (though admittedly slightly lower) quality level. NVMe storage? On most phones these days. Haptic engine? A similar quality one is in the 3a.

The XS might be excused for being a luxury model. But the 3a really makes you wonder about the XR, which is smaller, made of aluminum, uses an ancient LCD screen (same quality as iphones since the 5 with incremental improvements -- that must be a bargain compared to the XS's OLED), and even has a worse camera than the 3a. In fact the 3a even has a larger, nicer screen. Where on earth are those margins going?

" if Google can make a profit on such an overall-good phone at $400"

Are we sure they're making much of a profit from sale of the phone? Google literally pays Apple billions to be the default search engine on the iPhone. If they can chip away at Apple's market share, every user they can convert to Android will save them money and thus generate profit but indirectly. If your goal is to simply convert an Apple user to an Android user you can price the phone very competitively or even afford to take a loss.

> Are we sure they're making much of a profit from sale of the phone?

Yes, I think we can be pretty sure. Like Apple, Google will drop the price of the phone over time. And other manufacturers who must make a profit to survive (like Nokia) sell similarly speced phones for less.

You are paying a premium for Google phone, a premium Google pockets. They are justifying that premium by ensuring some of their software is only available on the Pixel. The outstanding low light performance of the Pixel camera is all done in software, as in the speedy voice recognition (they run the neural network locally on Pixel's because Google has the best neural network compression).

I think it's safe to say Google is leading software engineering company on the planet now, and here are leveraging that to charge a little more for their phones. As they should. Good luck to them.

Undoubtedly Apple is making a greater profit on the iPhone. Though I can’t help but wonder how much cheaper Apple’s phones would be if they monetized their customer base as aggressively as Google.

It’s got to be worth something, as Google didn’t grow into a hundred billion dollar company from phone sales. Their fortune is almost entirely built from targeted advertising.

You're going by specs only, rather than actual quality of components. See videos of blind tests between the XR's screen and the Pocophone for instance. People pick the XR, every time.

>Where on earth are those margins going?

There’s a reason they make pretty much all the profit in the phone selling business. If people are willing to pay it, why not charge it?

This model of Pixels seem to be designed as a low-cost entry point to Google's data-hoover. A profit on each handset, while nice, is not the focus as your information is where the money's made.

Unlike Apple, which won't make any more money off of you unless you sign up for a service.

Apple collects the same data. It just provides less usefulness to the user with it.

Or use it for ad targeting and much else Google uses it for.

For example Apple's machine learning processing happens on-device, rather than on Google's servers.

Gboard's machine learning also doesn't send what you type up to Google. There's no practical difference. Apple iPhoto sharing also stores photos on the server but just does an embarrassingly worse job of being useful. Similarly with iCloud Mail and collaboration suite versus Google's.

But doesn’t Siri require internet connection for all requests?