iPhone 5 Component Costs Estimated to Begin at $199

[MacRumors]

IHS iSuppli has released its estimate of the component costs involved in building the iPhone 5, performing a virtual teardown based on information revealed by Apple and industry knowledge. The estimate, which does not include numerous other costs involved in product development, manufacturing, and sales, such as research and development, software, patent licenses, marketing, and distribution expenditures, pegs the component cost of the entry-level 16 GB iPhone 5 at $199.

The new iPhone 5 carries a bill of materials (BOM) of $199.00 for the low-end model with 16Gbytes of NAND flash memory, according to a preliminary virtual teardown conducted by the IHS iSuppli Teardown Analysis Service. When the $8.00 manufacturing cost is added in, the cost to produce the iPhone 5 rises to $207.00. For the 32Gbyte version of the iPhone 5, the BOM cost increases to $209.00, while 64Gbyte version is estimated at $230.00, as presented in the table below.

The estimated $199 bill of materials (BOM) for the 16 GB model is slightly higher than the firm's $188 estimate for the iPhone 4S at that device's launch last year, but a halving of flash storage prices over the past year means that Apple's margins improve as capacity increases. While the 32 GB and 64 GB models of the iPhone 4S carried BOMs of $207 and $245 respectively, those estimates move to $209 and $230 for the iPhone 5.

While the price of some components, such as NAND flash, has fallen during the past year, the iPhone 5's overall BOM has increased mainly because its display and wireless subsystems are more expensive compared to the iPhone 4S."

Compared to the iPhone 4S, flash storage pricing declined by roughly $10 on the entry-level iPhone 5, but that decrease was more than offset by a $7 increase in display costs to $44 due to the adoption of in-cell touch sensors and a $10 increase in wireless costs with the move to Qualcomm's latest LTE-compatible chips. At the 64 GB level, a $37 decrease in flash memory compared to the iPhone 4S is able to overcome the other increases to lower Apple's overall estimated costs for the device.

Article Link: iPhone 5 Component Costs Estimated to Begin at $199

[Mattsasa]

holy ****! huge profit margin!

However the when I sell products I have an even larger profit margin, and profit is never my goal or purpose, only a side effect.

[HarryKeogh]

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

[ovrlrd]

Something to remind people who make a reply, Apple makes way more than $200+ off each iPhone sale. You only get it that cheap thanks to subsidies that the carriers give because of a 2 year contract.

[Puevlo]

Pass on some of those savings you greedy corporate shysters.

[1080p]

Originally Posted by HarryKeogh

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

Agree...

They could afford to be at

$169

$249

$349

On contract and pass some of that memory savings onto customers.

But... then again.... they sold 2 million in 24 hours.... I think they have little incentive to cut the price.

[Schizoid]

Originally Posted by HarryKeogh

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

...think of all that money they have in the bank though... that'll be used for... err... something interesting or important... maybe... one day.

[Deako]

Originally Posted by Puevlo

Pass on some of those savings you greedy corporate shysters.

Dont talk crap.

How much do you think R&D, manufacturing, assembly, import taxes for respective countries etc etc etc yada yada cost?

[Duncan-UK]

Originally Posted by HarryKeogh

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

Agreed

For me the worst development of recent times has been the move to soldered in memory and almost impossible to upgrade SSD in the laptop range - it has given Apple the power to gouge us for memory and storage - when previously you'd have had to be insane to buy Apple laptops with large memory and storage provided by Apple - much cheaper of course to do it yourself.

[kbright1892]

Keep in mind, this doesn't include the cost of R&D, labor, patents, marketing, etc. Those all add up. I'm not saying that Apple isn't making money hand over fist as their stock price indicates they clearly are.

[mrtune]

As a shareholder pricing means great profit and great return on my investment.

As a customer for only $10 difference between 16gb and 32gb, Apple should have just made the 32gb iPhone the entry $199 price and discontinue the 16gb phone. And make 64gb $299.

[kcamfork]

Originally Posted by HarryKeogh

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

This is the sole reason I'm avoiding the iPhone 5. Come on. Just make 32 GB the base model for $199 already.

[justin216]

The BOM and Manufacturing is only one part of the cost -- Marketing and R&D have to factor in there too. Apple is still keeping a fair amount of money from each phone, but it's their fiduciary responsibility to their shareholders to turn a profit -- not come close to breaking even.

I expect if you'd look at the BOM and Manufacturing cost of competitors phones ,you'd find the same or worse situation -- lots of cheaper made phones (ie, mostly plastic), unsubsidized, still fall in the $550-650 range.

[Qfic]

That doesn't include infrastructure, wages, advertising, etc etc etc. Profit margins are much slimmer than you'd imagine.
200$ on parts is actually a bit costly tbh.

[bad03xtreme]

So if you buy the 64gb model you are getting screwed hard.

$849
-$230
______
$619.00

[McBeats]

LOL... 10 bucks more for 32 gb, yet 100 bucks more for us. Those cheeky bastidges....

[dlewis23]

Originally Posted by HarryKeogh

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

These charts are stupid because they never take into account the cost of development of the hardware it self on Apples end or the cost for developing the OS and thats the most expensive part.

[bbeagle]

If you're hiring someone to build and install a fence on your property, and they quote you 5 days time at $3,000.... then you point out that the wood and nails only cost $400, are they ripping you off?

Cost of materials is not the complete cost of anything. Maybe Apple should sell a do-it-yourself iPhone kit for $200, and see if any of you can put it together?

[subsonix]

A product that is $649 retail includes a profit margin for the store that is selling it as well. Also, there are other costs involved, as others have mentioned.

The price for the material alone is pretty uninteresting, get your self a plastic bag of electronics components, it's not the same as a finished product at a shop shelf.

[zerolight]

This is the same for every manufacturer. Couldn't find an S3 BOM, though I expect it to look similar, but the new Galaxy Note 10.1 carries a $400 mark up over the BOM. It's not exclusively Apple. There's R&D, Marketing, Overheads, and all sorts of other costs in there, plus the market value.

http://itersnews.com/?p=11448

A $3000 guitar carries a few hundred dollars in labour costs, and the same again in materials. It's about more than the sum of it's parts.

[Marzzz]

Do you really want Apple to drop the price of an iPhone? Then don't buy it. That supply-demand thing.

[alent1234]

Originally Posted by HarryKeogh

I know it's been said a million times already (but I'll say it again) but man, it really bites that Apple charges an extra 200 bucks for additional memory that costs them 30 bucks.

i'm sure your employer doesnt upsell any high margin services

[Puevlo]

R&D has no cost. They pay minimum wages to employees to research and develop new technology. There are no extra expenses to this.

[itsaustinh]

it'd be nice if the memory tiers actually reflected usable memory on the device instead of including the size and adding the OS to boot. it takes up a lot of space on the lower end models.

[Deako]

Originally Posted by Puevlo

R&D has no cost. They pay minimum wages to employees to research and develop new technology. There are no extra expenses to this.

What planet do you come from?