iPhone 5 Component Costs Estimated to Begin at $199

[smithrh]

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

One of the dumbest things I've seen posted here.

Congratulations on this achievement.

 

[mrtune]

Why doesn't it sit right? Apple are making the highest margin off the biggest spenders? The other way around wouldn't sit right with some people either.

I believe everyone should pay their fare share. Apple should make no more profit off the higher spenders or the lower spenders. I think profit should be the same across the board with all their models.

Either way, I was just voicing an opinion. I happily ordered my 32gb phone and I'm excited to be getting it on Friday. I have no complaints, even though it would have been nice to pay a little less.

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Yes, I agree. This doesn't sit right.

However, if 16gb was $199 and 32gb was $209 and 64gb was $229, would ANYONE buy the 16gb or 32gb?

You have a point. Maybe put a $50 difference in price so it's not so harsh? Or just eliminate the 16gb all together and go $199 and $299 (32g and 64gb respectively) like in the old days before 64gb was even an option?

 

[ndpitch]

Every year, when the estimated cost article comes out for the new iPhone, without fail there is always a comment like this.

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

$849
-$230
______
$619.00

As stated in the article, and by numerous other people already, no, that is not how it works. There are many more costs associated with selling the iPhone.

 

[marc7654]

Build prices may be lower

Yes apple has some special manufacturing, that price isn't reflected in the component costs nor is the cost of software development. Those are the real costs not hardware. For reference see the $45 7" Android 4 tablet purchased in Shenzhen. http://venturebeat.com/2012/09/15/hardware-is-dead/ and available at Fry's for $99 in the US. http://www.frys.com/product/7210783

 

[roasted]

Dont talk crap.

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

A huge portion of Apple's followers are ignorant to alternatives and will buy anything made by Apple despite obscene pricing, which of course has worked in Apple's favor as it has shot them up the ladder to be one of the richest companies in existence... and you think there's a leg to stand on and say these prices are justified due to manufacturing and import costs?

 

[Deako]

A huge portion of Apple's followers are ignorant to alternatives and will buy anything made by Apple despite obscene pricing, which of course has worked in Apple's favor as it has shot them up the ladder to be one of the richest companies in existence... and you think there's a leg to stand on and say these prices are justified due to manufacturing and import costs?

You keep telling yourself that. If i found it obsene, i wouldnt buy it. A year after i buy the product, i can still get at least 1/2 what it cost me back. What other device holds on to its cost like that?

Cost of ownership is actually lower than buying something else, by another phone manufactuer.

You see i didnt name names then?

 

[crisss1205]

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?

If they did that then it would be awesome, I should be able to do it. I mean I have taken a 4S completely apart to change the front glass and managed to put it back together.

 

[flopticalcube]

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?

Manufacturing cost is included in the table above as $8 per unit. R&D probably another $20/30 depending on how many they end up selling.

 

[unlimitedx]

IPhone holds the highest resale value of any phone so Ive been able to sell the phone above the contract price each year

 

[G4DP]

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.

You mean the R&D of only 2.2% of revenue that Apple spends on it's entire line up every year?. That's a huge cost to add on to every phone.

 

[ivladster]

Just imagine how much plastic Samsung phones cost. $10? That's how they feel.

 

[fat jez]

They split out the cost of the DRAM and CPU, yet they are all part of the same die, for example.

 

[bommai]

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

Apple's success has resulted in a whole bunch of employees becoming millionaires in Silicon Valley! Minimum Wage! hahahaahahhaaha

 

[Veinticinco]

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

Ha ha ha. How's that view of your descending colon?

 

[CJM]

The simple fact that Apple wanted £100 more for an extra 32gb of NAND flash prevented me from buying the 64Gb model. £50? Okay I'll stretch. But £100 is stretching my personal morals a bit too much.

 

[kalsta]

Yes, I agree. This doesn't sit right.

However, if 16gb was $199 and 32gb was $209 and 64gb was $229, would ANYONE buy the 16gb or 32gb?

That's exactly it. If they're going to offer different price options, they have to do it in a way that matches perceived value to the consumer, not the cost of components, or they'd sell none of the lower end model. So everyone saying the 64GB buyers are getting screwed… you're only half right. Apple are going to be estimating sales of all models combined with a view to what their total profit is, and pricing around that. So you might say the 64GB buyers are getting the raw end of the deal based on component prices, but you might just as well say the 16GB buyers are getting an excellent deal based on component prices (and all other things considered).

At the end of the day though, it doesn't matter. You, the consumer, will place your own value on the device and on the various storage options, and buy (or not buy) accordingly.

 

[Veinticinco]

Don't forget to add in the 29 ($ / £ / €) extra for that frickin' 30-pin-Lightning adapter they are screwing the consumer on. You know, the one they originally planned to bundle in before the beancounters launched a revolt.

 

[Fruit Cake]

I think the wireless section is just a guess, as there are 3 models with various cellular capabilities, I don't think the cost would be the same. Verizon model would cost more for sure.

 

[root42]

R&D is a major cost. Apple does not pay minimum wage for these employees. You may be confusing R&D (Research and Developement) for manufacturing cost employees.

I think it is safe to assume that Apple will move 100 million units over the course of the next year. Even if iPhone 5 R&D did cost 500 million USD, which would be a massive research budget, that comes out to an extra 5 USD for each phone, over one year. This figure is obviously completely made up, since there isn't a simple "iPhone 5 research budget", but the number shows that with increasing sales, the initial development cost does not matter that much anymore.

Of course, there are additional costs like software updates, marketing, managing production, securing materials etc etc etc.

 

[lifeinhd]

Going with this analogy, they should charge you x amount for materials and x amount for installation. If you choose a more costly material, the installation fee should stay the same and it takes no more work on their end.

Well, that's not quite true. Higher capacity storage models have more memory chips which need to be soldered on... using $170 worth of labor and solder

 

[Barukuri]

I wonder what would people prefer more. Cheap iDevices with much more expensive software(apps) or expensive phones but dirt cheap apps. I guess can't have the best of both worlds.

 

[lifeinhd]

If they did that then it would be awesome, I should be able to do it. I mean I have taken a 4S completely apart to change the front glass and managed to put it back together.

It'll be a bit more involved than that... more like "here's a hunk of aluminum, some chips, a circuit board and a display. Now go build an iPhone"

 

[marzer]

[RANT=”Begin”]

Never ceases to amaze me, the naïveté of the general public. Since the 1990’s material costs have been posted of popular tech gadgets, with the proverbial rebuttals explaining that production and distribution costs can far outweigh the material/manufacturing costs as an objects selling price.

And yet the flood of, “OMG, what greedy bastards. That thing cost them $50 in materials but they dare sell it for more than $50. Off with their heads!”, continue. Are the people responding as such NEW to the internet? Even if you don’t live in a capitalist society this “complex” concept has been explained ad-nausea for almost two decades on forums.

And anyone born and raised in America making such claims is simply showing their idiocy. Even as a kid I was well aware my toys cost cents to a few dollars to make. But knew they didn’t “magically” arrive on the store shelf in such pretty packaging. And that there were additional cost associated with distribution and sale of any item.

Come on people wise up. You think this $h!t should be given away for the cost of materials? If you’re not working on the side of production, you’re probably working somewhere on the side of distribution, or marketing or administration or support services or – and I’m sure we’ve all done this at some time in our life – “sales?” So guess how most of us get paid? From the mark-up.

Oh, and hate to burst your bubble, but a big part of the profit margin is set by what YOU the public are willing to pay. Quit humping new iPhones evey 12 months like your very existance depended on it and Apple would need to drop the price to encourage sales.

[/RANT]

So WTF is with these outrageous prices Apple is charging for iPhones. I can't believe with all that cash they can't sell me a 64GB model for $199. Jeesh!
_________________________________
Sent from my Motorola Razr

 

[mlmwalt]

Sorry guys, R&D costs a ton of money. The overhead costs probably give these a 25% profit margin.

 

[Jimmy James]

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

$849
-$230
______
$619.00

Why don't you open a restaurant and make some tasty food. I'll drop in 3 times a day to eat and pay you the cost of food goods.