Seoul: Samsung Electronics has pulled out all the stops on its new Galaxy smartphones, but their modest prices compared to the latest iPhones throw an uneasy spotlight on the long-term cost of fighting Apple`s premium branding.
The 64-gigabyte model of the Galaxy S6 edge costs $290.45 to make, according to IHS Technology. That`s more expensive than any Galaxy S model and iPhone analysed by the U.S. research company.
For the price of producing 100 sets of this S6 edge model, Apple can make 121 sets of 64-GB iPhone 6 Plus, calculations by Reuters show. In 2010, when Samsung launched the Galaxy series and Apple unveiled the iPhone 4, their production costs were almost on par.
Samsung`s flagship devices since the Galaxy S II in 2011 have consistently cost more to build but sold at similar prices of comparable iPhones - sometimes those with even smaller storage.
Consumers paid similar amounts for the 32-GB versions of the Galaxy S4 and S5 as Apple`s 16-GB models for the iPhone 5 and 5S, according to IHS.
In the case of the new S6 edge, the 64-GB version sells for $799.99 in the United States (without a carrier subsidy), less than the retail price of $849.99 for the iPhone 6 Plus with the same storage capacity.
The chief reason behind this gap is that Apple`s iOS operating system and robust software and services ecosystem command a much larger premium among consumers.
Lacking those differentiators, Samsung has to offer higher quality hardware to stand out in an increasingly crowded marketplace but can`t fully reflect those costs with higher retail prices.
Should this trend persist, margins for Samsung`s mobile business could be compressed further, and the only way to offset that is to rev up sales volume.
Another factor in Apple`s favour, analysts say, is the economy of scale it enjoys by sticking with just one or two new models each year.
Samsung, on the other hand, has a far larger portfolio of phones that retail for as little as $100 or as much as the S6 edge.
"There is such a thing as a volume discount: even if you buy the same parts, the price for a customer ordering components for 200 million phones will be different from the price for a customer ordering for 50 million phones," Daewoo Securities analyst Jonathan Hwang said.