16 GB iPhone 4 Component Costs Estimated at $187.51

[turbineseaplane]

Wrong...

They meant to say $190.51.

One must also include the cost of manufacturing the Bumper that's required for the phone to operate correctly.

 

[gnasher729]

Apple is doing well by these phones.


I do find it hilarious though. When the component cost of the Amazon Kindle was posted on this site, people attacked them as the most evil company ever. Apple has a higher markup and people jump on here yelling R&D, and Apple products are made with love, etc. lol

I so enjoy our unbiased boards.

No, what happened is that with the Kindle people attacked Amazon, with the iPhones, iPods, iPad etc. people attacked Apple. They might even be the same people, or they might different people, but they all didn't spend one second thought on the fact that end user price minus component cost is not gross profit and gross profit is not net profit. And those attacking Amazon have been told that there is R&D and dozens of other costs not included in the component cost, just like those attacking Apple here are being told.

And the markup of Windows is 200,000% above component cost
And on the App store the markup above component cost is ????

 

[LagunaSol]

Couldn't you apply that logic to any software maker? Have you seen the cost of Final Cut Studio?

Of course. But Microsoft seems the ideal example here as their enormous profits come almost exclusively from products with insanely high profit margins.

 

[potaco]

They meant to say $190.51.

One must also include the cost of manufacturing the Bumper that's required for the phone to operate correctly.

$3 seems way too high... I'd say the price either stays the same or goes up to maybe $187.52.

 

[irwcll94]

Okay, so that means for 1.7 million iPhones, it took them $3,187,670,000 to make all of those. (17000000 x 187.51).

Let's say Apple gets $599 for every phone, in an imaginary world everybody got the 16 GB model. That's $10,183,000,000. (17000000 x $599)

Apple made around 7 Billion Dollars off this launch. ($10,183,000,000 -$3,187,670,000 = 6,995,330,000).

And that's not thinking at all about the 32 GB Model.

When the quarterly reports come out, stocks are going to soar.

Is this "new math"? 1,700,000 * 187.51 = 318,767,000
NOT $3 Billion!

If they get $599 for every phone thats $1,018,300,000

They made around $699,533,000 at launch, not anywhere near 7 Billion!

 

[sslanchi]

I don't know any company that can get away with a 200+% markup on a product.

Tiffany & Co silver jewelry sells at a markup of around 1000 %

 

[Xian Zhu Xuande]

Of course. But Microsoft seems the ideal example here as their enormous profits come almost exclusively from products with insanely high profit margins.

Well, this is a little unfair to Microsoft, in honesty. One can criticize some of the business practices which have brought them where they are today, but it isn't like they're selling a horrible product in Microsoft Office, and it isn't like they've stopped developing and investing into it.

Software really should be sold for the price people are willing to pay for it because that's the price it is worth, and in the case of professional software (e.g. Adobe CS) the prime target is professionals and business (smaller demographic; larger prices). In the case of general consumers the prime target is saturation (larger demographic; smaller prices).

Microsoft is playing the middle of the road with Office Home and Student (or whatever they're calling it now) and the professional editions. More power to them.

 

[turbineseaplane]

$3 seems way too high... I'd say the price either stays the same or goes up to maybe $187.52.

Touché

 

[SmileyDude]

I see them taking the current 32GB model and making it the $199 model.
Then making the $299 model be a 16GB iPhone4 case design with Retina display and camera. Everyone will want a 64GB model but that will go away making lots of people unhappy yet feel compelled to buy the 32GB model for $399. Then a year later, they will bring back the 64GB model as a small incremental change.

No way is Apple going to have two different 32GB iPod touch models -- one of the main ways they differentiate in their lineups is by having the capacity of the device get bigger the further up the price ladder you go. They will do things like having different product lines have less capacity for a higher price (iPad 16GB vs iPod touch 64GB, for example), but not within the same line.

They also have been traditionally offering 2x the storage of the iPhone in the iPod touch lineup. When the iPhone was 4GB and 8GB, the touch was introduced at 16GB. This was followed with the touch moving to 32GB once the iPhone jumped to 16GB and then 64GB with the introduction of the 32GB 3GS last year.

The other thing is that they already have a 64GB iPod touch right now -- why would they want to step backwards?

The iPhone is fundamentally more expensive due to the extra features that the touch does not have -- camera, cell phone functionality, larger battery to compensate for the cell phone functionality. Just because iSuppli estimates that the iPhone 4 costs this much doesn't mean that the next generation iPod touch will have to follow. As I recall, the cost estimate for the 3GS last year was very similar, and that didn't prevent Apple from upgrading the touch similarly.

 

[nascimento]

At no point did I say I support the business model of places like Walmart. In fact, I refuse to shop there on grounds of principle. And consumers should think a little bit about the vote they're making with their money when they decide where to spend it in order to save a buck.

Agree!

 

[Jimmy James]

What about paying for Apple HQ & retail stores? Employee salaries? The list goes on.

Do you really think that $20 meal costs the restaurant $10 in "parts"?

 

[gnasher729]

Is this "new math"? 1,700,000 * 187.51 = 318,767,000
NOT $3 Billion!

If they get $599 for every phone thats $1,018,300,000

They made around $699,533,000 at launch, not anywhere near 7 Billion!

Count me deeply ashamed for not catching that the calculation was off by a factor of 10! Doesn't change the fact that the $700 million (instead of $7bn) is not what Apple made, but the difference between retail price and the money paid to manufacturers of components. Apple's net profit is likely around $100 million.

 

[cvaldes]

I don't know any company that can get away with a 200+% markup on a product.

Coca-Cola, PepsiCo, Anheuser-Busch to name a few.

You drink bottled water?

 

[marksman]

I don't know any company that can get away with a 200+% markup on a product.

1) Lots of businesses have larger markups than that.

2) You seem ignorant on the massive other costs Apple has related to its products. From Research and Development, to Testing, to software development, to a massive Customer Support Expense, including their included 1 year warranty that is pretty much beyond what any other business does.

 

[L3X]

Even if Apple makes $10 per 16 GB iP4, they've sold 1.7 million, that's $17 million. If they sell 5 million phones by the end of 2010, that's $50 million.

That's not counting their bumper accessory that probably costs $0.10 to make and App store royalties.

They are doing well.

 

[TechKnow]

I don't know any company that can get away with a 200+% markup on a product.

You don't know very many companies then!

 

[JAT]

Coca-Cola, PepsiCo, Anheuser-Busch to name a few.

You drink bottled water?

Actually, most of the companies mentioned so far in this thread are far above 200% markup.

Most products are at ~300%. That's ~100% from manufacturer to retailer, and another ~100% from retailer to consumer. (trust me, that means 300% total, get a calculator) Be glad you aren't a distributor, your cut is somewhere in that first 100%. Most manufacturers don't get the amount you see on a price tag at a store, they get around 2/5 that. The iPhone is different to a point because there is no distribution chain, a larger portion of profit goes to Apple.

The food, cables, etc. mentioned so often as examples in this thread have far higher markups. You want sick? Check the history of the Lexicon BD-30 bluray player.

 

[powers74]

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 ...

Manufacturing, employee pay, marketing, running numerous facilities, business licenses in numerous states and countries, customer service, regulation fees....

I don't know any company that can get away with a 200+% markup on a product.

%2-300. That's just business. I take it you don't own one?

 

[badpinoy]

i doubt they make that little over the iphone. you have to consider that apple buys the components in bulk. when you buy in bulk the cheaper the price of the individual components. which in turns drive up price margins. but they failed to consider that R&D that goes into the product.

 

[kernkraft]

Take home a car for free! (subject to 60 months loan).

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...

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.

Prove those complainers wrong! I'll give you $45.000 for 100 iPhone 4s, provided that you ship them to the UK. Surely, if Apple hardly makes money on these phones, you'll make even more at this price.

I also found a car for you yesterday - it's £5.500 (subject to monthly payments and further charges amounting a total cost of around ten times as much).

People should give up the idea that the iPhone is a $300 phone. It is not. See the unsubsidised prices at Apple's UK site for a rough idea. Don't forget to multiply the figures with 1.65 to get the USD figures!

 

[ranReloaded]

So the chinese workers can't afford one, even if they assembled it themselves!

 

[JayLenochiniMac]

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Nice margins for Apple!

Is that a good thing for Apple customers though?

It's good for Apple's policy of replacing cracked iPhones for only $199, which in turn benefits us and allows us not to waste $100 a year on squaretrade.

 

[chris200x9]

Really, you don't think so?

http://www.toptenz.net/top-10-biggest-price-markups.php

w00t steve wilson is awesome! I'm from detroit btw

 

[NikeTalk]

I don't even wanna see Mac or Macbook Pro numbers my head might explode!!

.....oops I have to incorporate the research and development now the price seems too low perhaps they should mark all Apple products up another 20% according to MR.

 

[thedarkhorse]

I don't know any company that can get away with a 200+% markup on a product.

do you never buy clothes?