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BusinessWeek reports on new teardown research from iSuppli estimating component costs for the entry-level 16 GB iPhone 4 at $187.51, up slightly from the $178.96 figure for the 16 GB iPhone 3GS at its launch last year.
"Over the years, the iPhone has generally tended to hover in the $170-to -$180 cost range because Apple seems to be trying to hit some kind of budget," Kevin Keller, who helped conduct the iSuppli teardown, says in an interview.
According to iSuppli, the new iPhone's most expensive component is its screen, with the so-called "Retina" display clocking in at $28.50.

As with all of iSuppli's analyses, the component costs do not cover such expenses as software, research and development, distribution, and patent royalty costs that cut significantly into Apple's apparent profit margin. Also unknown is exactly how much Apple is receiving in subsidies for each iPhone 4 sold, although various reports and guess have placed it somewhere between $300 and $450.

iSuppli's report notes that the component costs for the iPhone 3GS, still available in an 8 GB form priced at $99, have dropped to $134 from the $179 figure at last year's launch. While the decline is primarily due to component cost declines that are natural in the technology industry, it is unclear whether the figure are comparing today's 8 GB model with last year's 16 GB model, in which case some of the price difference would be due to the smaller about of NAND flash memory required.

Article Link: 16 GB iPhone 4 Component Costs Estimated at $187.51
 

quagmire

macrumors 604
Apr 19, 2004
6,615
1,719
So we're pretty much buying the 16 GB iPhone 4 at cost of the components( for those who are upgrade eligible). Pretty good deal when strictly talking hardware and not the service provider, IMHO. And yet people will still complain the iPhone is expensive/overpriced. :rolleyes:
 
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ghostface147

macrumors 68040
May 28, 2008
3,497
3,389
I wonder how much those other factors cost. R&D, royalties, labor, and the like...
 
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xlii

macrumors 68000
Sep 19, 2006
1,859
68
Millis, Massachusetts
Saving in component cost is a big deal when you sell a lot of the item. Apple should sell close to 10 million iPhones this year. If you can save even 10 cents on a single component... that works out to a savings of 1 million dollars.
 
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Marx55

macrumors 68000
Jan 1, 2005
1,789
617
Is that based on the standard market price of components or on the price that Apple gets? It is not the same purchasing a single screen or 100 million screens!!!

See this as an example:

iPhone costs $188 to make
The gyroscope chip, for example, apparently costs Apple $2.60 while it costs $2.90 in quantities of 200,000. These disparities pop up in a number of places, which, sadly, lends an air of WTF to the proceedings.
http://www.mobilecrunch.com/2010/06/28/iphone-costs-188-to-make
 
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MH01

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Feb 11, 2008
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So we're pretty much buying the 16 GB iPhone 4 at cost of the components( for those who are upgrade eligible). Pretty good deal when strictly talking hardware and not the service provider, IMHO. And yet people will still complain the iPhone is expensive/overpriced. :rolleyes:

Take your upgrade cost. Take the amount of months you just signed up for and multiply it by the monthly cost. That is the cost of the phone. Regardless of if you use all or none of your allowance, that is the minimum you will pay. Hardly cost price. Service provide includes a large chunk of subsidy in it.

There is a reason phone are given away for free on $20 contracts, they are crap. The Iphone, outright or on contract is a premium mobile.

Over here in the UK its actually cheaper for many people to buy the phone outright and use thier current Plans which are better value. On my company discount I pay £10 for the same value as I used to get on my £35 plan (iphone), if heaps cheaper for me to buy the phone outright then on a 24month contract.
 
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Mal

macrumors 603
Jan 6, 2002
6,249
17
Orlando
I don't know any company that can get away with a 300+% markup on a product.

Yes you do, and no, Apple doesn’t get that. Just go buy batteries at RadioShack. Something like a 1000% markup at the store level, but people buy them up like hotcakes (I used to work there, so I was able to look at our purchasing costs on those).

More significantly, this is only the component cost. Read the article (heck, use some common sense). There are a number of other costs that cut into the profit (markup), so Apple really only makes their average of 30% most likely, maybe slightly more.

jW
 
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potaco

macrumors regular
Mar 12, 2010
152
4
I don't know any company that can get away with a 200+% markup on a product.

Apple? Most retail stores selling almost any type of cable?

Take your upgrade cost. Take the amount of months you just signed up for and multiply it by the monthly cost. That is the cost of the phone. Regardless of if you use all or none of your allowance, that is the minimum you will pay. Hardly cost price. Service provide includes a large chunk of subsidy in it.

Service isn't free, so your math doesn't work.
 
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MH01

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Feb 11, 2008
12,107
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I don't know any company that can get away with a 200+% markup on a product.

Bose. Monster Cables... list goes on an on.

These total cost of device threads are silly, you cannot remove the R&D and associated costs.

Apple can charge what they like, and they do not need to line the device with cold.

The only thing that ever annoyed me about apple pricing was when they called the Ipad and unbelievable Price... Total BS, it still had a huge Apple markup. (Okay the Magical was also retarded)
 
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mrtune

macrumors 6502a
Jun 23, 2007
803
20
I don't know any company that can get away with a 200+% markup on a product.

As others mentioned with retail stores, markup is huge. Even bigger when you talk about restaurants. A pop they sell you for $1-$2 only costs them like $0.10 or so. Or a pizza that cost $3 to make and $20-30 to sell. Alcohol is even worse!
 
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jav6454

macrumors P6
Nov 14, 2007
17,026
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1 Geostationary Tower Plaza
I don't know any company that can get away with a 200+% markup on a product.

Best Buy does this all the time. Buy a PS3 or XBox, sure you get MSRP, buy the accesories or HDMI ($200 for a 6-ft Mosnter cable or $60 for a cheap 6-ft Dynex that you can find on Newegg.com for $10) cords or other stuff, you get shafted, hard. Best Buy marks-up their accesories 300% as well because their profit is not from the units sold, but how much crap you can sell the customer with it.

A good example is trying to buy a PC (any laptop, desktop, etc) at Best Buy, sure you get a decent PC and low priced, but they want to bundle in Geek Squad services that are a rip-off and do nothing.
 
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Spud1

macrumors member
Mar 16, 2008
40
1
I don't know any company that can get away with a 200+% markup on a product.

Apple don't here..at least not yet.

R&D and licencing costs will make up a huge percentage of the cost (which is not included here)..R&D especially will be millions upon millions of dollars.

I'd be surprised if they are making more than 10-20$ per phone that they sell at the moment. Of course this profit will increase with every single phone that is sold (as each sold phone will reduce the R&D cost per phone), so eventually they will be making a nice profit. Still won't be hundreds per phone though by the time you take into account the distribution network, staffing costs, etc etc etc.

They don't do too badly though really, 10-20$ per product on something as high volume as this is a very very good profit..and although I don't have facts to hand i'm sure that is way above industry averages.
 
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nikhsub1

macrumors 68020
Jun 19, 2007
2,179
1,292
mmmm... jessica.'s beer...
These "raw costs" can be very misleading... there is a lot not taken into account - the cost of sourcing these products, shipping, labor etc. The raw cost seems about right in my mind. Those of you saying that you will pay it back over time, maybe. If I didn't buy the iP4 then I would still be paying the same amount each month to AT&T with my 3GS... so for me, there is no difference.
 
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bmms8

macrumors 68020
Dec 19, 2007
2,484
101
i hope people dont think apple has big margins on these phones. it amazes me the cost they pay.. they barely make anything on these devices...
 
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