Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
16 GB iPhone 3GS Teardown Reveals $178.96 Parts and Manufacturing Cost
- Thread starter MacRumors
- Start date
- Sort by reaction score
look in the mirror, buddy
we are the ones losing out b/c ATT locks you into a 2 yr deal, at like 70 per month. 70 * 24 = $1,680. that easily covers the cost of the phone, and then PLENTY more.
Also worth noting:
iSuppli pull a lot of these numbers straight out of their ass they're often complete guesswork. Which might help explain why Apple's margins always seems to be about 30%, when iSuppli pitch them at closer to 70%.
In short worse than useless.
iSuppli pull a lot of these numbers straight out of their ass they're often complete guesswork. Which might help explain why Apple's margins always seems to be about 30%, when iSuppli pitch them at closer to 70%.
In short worse than useless.
I think it's somewhat funny how we all sit here and talk about how much something costs in relation to what it is sold for. The reality of economics is that if you are willing to pay for it, they will charge for it. Trust me, if the iphone was not a blow out product that has sold millions and millions of phones, they would either have sold them way cheaper, or stopped making them.
Likewise, actual competition helps us out. For instance, they are selling the original 3g 8gb for $99 subsidized. Now, I am pretty sure this was a direct response to the release of the palm pre. Just my 2 pennies though.
Likewise, actual competition helps us out. For instance, they are selling the original 3g 8gb for $99 subsidized. Now, I am pretty sure this was a direct response to the release of the palm pre. Just my 2 pennies though.
What is the $6.50 manufacturing cost? Direct labor and plant overhead? What sort of cost model is this analysis using? I've had a year of management accounting there is just not enough information about where they are getting numbers and what is included or not in them for this to be meaningful besides the pricing of direct materials -- though we can't know for sure what kind of discounts Apple may even be getting on that. It admits to excluding enough costs, and is ambiguous enough, that it doesn't really tell us anything about the true profit margin of the iPhone 3GS.
What's Apple's profit margin ....
.... is of interest to consumers.
It's speculated that Apple sells bulk iPhones to AT&T and other carriers starting at around $450 USD, which is then subsidized to $199. That number was probably conjured up for the previous 8GB iPhone 3G.
That's undoubtably changed now with the 16GB iPhone 3GS probably at the same price point for carriers. Whatever the real cost to AT&T for the $99 3G would be interesting, considering Apple has already recouped their associated R&D costs for the device.
.... is of interest to consumers.
It's speculated that Apple sells bulk iPhones to AT&T and other carriers starting at around $450 USD, which is then subsidized to $199. That number was probably conjured up for the previous 8GB iPhone 3G.
That's undoubtably changed now with the 16GB iPhone 3GS probably at the same price point for carriers. Whatever the real cost to AT&T for the $99 3G would be interesting, considering Apple has already recouped their associated R&D costs for the device.
look in the mirror, buddy
we are the ones losing out b/c ATT locks you into a 2 yr deal, at like 70 per month. 70 * 24 = $1,680. that easily covers the cost of the phone, and then PLENTY more.
Oh it's worse than this for me. Not sure where you came up with $70. With a 700 minute/month plan, I pay:
iPhone 1: $60.00 voice + $30.00 data + $5.00 for 200 SMS txts + tax
iPhone 2: $9.99 voice (family talk) + $30.00 data + $5.00 for 200 SMS txts + tax
That's about $140/month x 24 months = $3360.00 + tax!
Yup ... I'm thinking I've paid for those phones pretty quick. The rest obviously goes to AT&T to "improve infrastructure" and "pay employees", and "pay for retarded TV ads".
So it's confirmed: notwithstanding exchange rate fluctuations, O2's massive price-hike compared to last year on the initial handset price is totally without justification, given the material cost and US handset price remained the same. They were lying about maintaining the subsidies. I can't wait until their exclusivity ends.
Why does this always cause such a fuss?
Tell the auction house that Van Gogh only used $75 worth of paint and canvas so you only want to pay $100.
There is NO WAY of knowing the true cost. Shipping, marketing, packaging, utilities, executive salaries, R&D, etc.
STOP COMPLAINING. Just like when then first iPhone dropped in price after 3 months, whatever price you payed, you saw the tag.
How many of you buy $75+ shoes from Nike, Reebok, Skechers... they cost about $10 to make.
Tell the auction house that Van Gogh only used $75 worth of paint and canvas so you only want to pay $100.
There is NO WAY of knowing the true cost. Shipping, marketing, packaging, utilities, executive salaries, R&D, etc.
STOP COMPLAINING. Just like when then first iPhone dropped in price after 3 months, whatever price you payed, you saw the tag.
How many of you buy $75+ shoes from Nike, Reebok, Skechers... they cost about $10 to make.
You do understand that (1) hardly anyone in this thread has really complained about anything, aside from you complaining about people complaining, and that (2) there are other reasons why this information is of interest than accusing Apple of over-charging for their hardware?
So what?
We arent taking about manufacturing plastic cups or zips.
This doesnt taking into account the coast of R&D of the hardware, of the O.S nor the marketing etc.
Does Apple make a big profit? Well of course! Is it excessive? Well, they can sell a couple of million phones on launch day the last two models. No one's making them pay.
I do agree though that given the raw components compared to the sale price are so cheap that for spending $10.oo more on hardware the could deliver a better device. (screen etc.).;
But then again people now expect Apple to keep the cost of the new devices the same.
If apple cut their profit by $10.00 per phone, at over 8,000,000 iPhone 3G's sold, thats $80,000,000 of Mc'Profit that they would be forgoing. Investors would not be very forgiving to the Directors of
inc. about this.
We arent taking about manufacturing plastic cups or zips.
This doesnt taking into account the coast of R&D of the hardware, of the O.S nor the marketing etc.
Does Apple make a big profit? Well of course! Is it excessive? Well, they can sell a couple of million phones on launch day the last two models. No one's making them pay.
I do agree though that given the raw components compared to the sale price are so cheap that for spending $10.oo more on hardware the could deliver a better device. (screen etc.).;
But then again people now expect Apple to keep the cost of the new devices the same.
If apple cut their profit by $10.00 per phone, at over 8,000,000 iPhone 3G's sold, thats $80,000,000 of Mc'Profit that they would be forgoing. Investors would not be very forgiving to the Directors of
inc. about this.http://www.verizonwireless.com/b2c/store/controller
$469, and it's more mind numbingly crappy Windows Mobile stuff.
http://www.t-mobile.com/shop/phones/Cell-Phone-Detail.aspx?cell-phone=T-Mobile-G1-with-Google-Black
$399, unsubsidized.
http://www.verizonwireless.com/b2c/...t&action=viewPhoneDetail&selectedPhoneId=4286
$499, unsubsidized.
All smart phones are expensive. Maybe not as much as the iPhone, but not cheap either.
Well, I agree that I would have love to see an OLED because of the incredible contrast, but who knows what issues that could bring up with the capacitive touch functionality, or issues with heat sensitivity, or voltage needs, etc. I'm sure the design and engineering considerations that went into the iPhone are far more complex that most of us can imagine. Yes I know the Zune HD supposedly is OLED and capacitive touch, but as I said we don't know the details. Maybe the blue phosphour on these small OLEDs loses brightness too quickly for Apple's tastes. It's all a mystery except to those with first hand knowledge.
Regarding screen resolution, I'd imagine Apple didn't want to heavily fragment the platform for 3rd party app and game developers... However, I'm sure they are still working on complete resolution independence for both iPhone OS and regular OSX, which would go a long way to pushing both platforms forward with higher density displays.
A lot of this cost from AppleCare is covered by the AppleCare customers who purchase and never once need to use it. I know I had AppleCare with my first iMac and used it once during the 3 year period for a mouse replacement. I also had it on one of my iPods and never used it. I also know someone who purchased the AppleCare for his iPhone and never used it. I am guessing there are more that purchase and don't use than there are that purchase and use AppleCare all the time.
All cell phone companies do this. Not only does it allow them to get massive profits off the sale of these unsubsidized phones, but it helps the cell companies by encouraging people to purchase the subsidized phones in order to save a lot of money. Plus, the cell phone company is still making a small profit off the subsidized phone.
For those wonder why the case and the exterior looks of the phone are unchanged from the 3G and why so many components are the same as the 3G ... this is helping keep prices down. The new iPhone3GS costs the same $199 that the previous 3G had cost, and you get 16GB instead of 8GB. If Apple had redesigned the case and all kinds of other stuff, you would not be able to get a 16GB 3GS for $199. Apple is going to maintain their profit margin, so they would have raised the phone from $599 up to whatever it would cost, and your $199 would go up also.
If there is a profit margin of $400 here (that AT&T pays, and then makes up from our increased monthly service fees), then you can see how Apple can afford to give AT&T a better deal on the previous 8GB 3G so it can be sold for $99. (8GB of flash costs Apple a lot less than 16GB, which means the 3G cost to build is even less)
If there is a profit margin of $400 here (that AT&T pays, and then makes up from our increased monthly service fees), then you can see how Apple can afford to give AT&T a better deal on the previous 8GB 3G so it can be sold for $99. (8GB of flash costs Apple a lot less than 16GB, which means the 3G cost to build is even less)
I have run across one reference saying that the AT&T subsidy was $450, meaning that apple would get $299+$450=$749 for the 32G iphone. Others have suggested that the subsidy is $400; since you can buy an unsubsidezed 32G for $699, this seems to make some sense.
Guys, have you stopped to consider that you would get charged the same for your monthly plan regardless of whether you received a subsidized phone, bought a phone unsubsidized or did not upgrade at all?
If all of this is true, then when you get a subsidized phone, the provider is actually making less money on that same plan and are using the phone as an incentive to commit to a contract term and to add on features like a data plan which you might not have subscribed to if you had not used a smart phone on their network before.
Phones like the iPhone when sold subsidized can be an incentive for some to switch over from Verizon to AT&T. AT&T is willing to swallow the price difference in exchange for a new customer on a contract term with data service.
If all of this is true, then when you get a subsidized phone, the provider is actually making less money on that same plan and are using the phone as an incentive to commit to a contract term and to add on features like a data plan which you might not have subscribed to if you had not used a smart phone on their network before.
Phones like the iPhone when sold subsidized can be an incentive for some to switch over from Verizon to AT&T. AT&T is willing to swallow the price difference in exchange for a new customer on a contract term with data service.