iPhone 5 Component Costs Estimated to Begin at $199

[barkmonster]

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.

I find their RAM prices and standard RAM configs way too expensive and way too lacking. 8Gb of RAM for anything is cheap now and should be a standard on a desktop or laptop in this day and age.

Their choice and price of SSDs is attrocious too when for their BTO prices they could be offering 86K IOPS 550Mb/s SSDs of 240Gb and 480Gb.

 

[raf66]

I guess I understand that people are critical of a company that marks up its products so that it makes a healthy profit. I mean, uber-successful companies (and people for that matter) are easy targets right now for the "us against them" crowd.

But come on, are we naive enough to think that EVERYTHING that we consume EVERY SECOND of EVERY DAY of our lives has not been marked up to some degree??!! Go to a restaurant for lunch or dinner and order a soda at $1.99 and remember that there's probably $.25 of soda in that cup. That's an 800% markup. And the article itself makes clear that not all costs have been factored in, so therefore the true cost of the phone/memory/accessories is higher than reported.

Companies exist, in very large part, to make money. How much money? As much as possible while still maintaining the ability to sell their widgets. If a company manufactures products and prices them higher than the market will bear, it will find ways to lower the cost of production (and hence lower the retail pricetag) and/or increase the demand for the product so that it WILL sell. If it doesn't, it goes out of business.

As consumers, we have the power to not purchase a particular product we don't find affordable and/or worthy of our hard-earned cash. In fact, all of us exercise that power on a regular basis as evidenced by what we consume (or don't consume). You don't agree with Apple about the iPhone 5 markup, don't buy it. We have choices, but it's up to us to exercise those choices. I don't believe a smartphone is a necessity of life, and even if having a MOBILE phone may be a necessity for some, there are some cheap/free flip phones that can make calls just fine. That is the basic utility of a phone, right?

I, for one, am excited to receive my iPhone on Friday and I'm happy that the company I'm buying it from is in good financial shape. Such a transaction is a win-win for all concerned: I get a product that I want and will help me get things done in my life (personally and professionally) and the company makes a profit on my purchase, thereby giving it an incentive to continue creating new/improved widgets that I may or may not want (but others may) in the future.

 

[KanosWRX]

Just goes to show how hard Apple likes to screw over customers who want a few more gigs. Seriously the price they charge for 32 and 64 GB models is insane. They need to ditch the 16 GB model and start 32 GB at 200 dollars on contract, then at the very least make the 64GB 300 Dollars on contract.

I stopped buying the 32 GB version as I can't justify paying 100 dollars more for 16 GB of space. just insane. But then again this will probably be my last Apple iPhone.. loosing faith in the company and seeing these prices makes me loose even more.

 

[bbeagle]

You are dreaming in technicolor. I would bet you $10,000 right now that it;s closer to $2 than it is to $200.

Walk into your local Best Buy and ask the manager how much they make on the sale of an iPhone. It's almost nothing.

Then why would a business sell something if they make no profit from it?

You're telling me that Best Buy spends $100's of dollars a month on rent for the Mobile Phone area (as a percentage of rent for their entire building), spends $8+/hour for an employee to man the place. If they sell 1 iPhone an hour for $2 profit, they are actually LOSING money selling that iPhone.

Really? How come the managers of Best Buy haven't figured that out, and closed down the Mobile Phone area? It's because they are making a lot more than $2 on the phone - closer to $200.

----------

Go to a restaurant for lunch or dinner and order a soda at $1.99 and remember that there's probably $.25 of soda in that cup. That's an 800% markup.

Now go to the ballpark, and that same soda is $6.00. A 2400% markup!

 

[bbeagle]

http://www.phonescoop.com/carriers/forum.php?fm=m&ff=2&fi=2376325

Verizon's markup is more than $180 for the iPhone.

 

[Lynn Belvedere]

Then why would a business sell something if they make no profit from it?

You're telling me that Best Buy spends $100's of dollars a month on rent for the Mobile Phone area (as a percentage of rent for their entire building), spends $8+/hour for an employee to man the place. If they sell 1 iPhone an hour for $2 profit, they are actually LOSING money selling that iPhone.

Really? How come the managers of Best Buy haven't figured that out, and closed down the Mobile Phone area? It's because they are making a lot more than $2 on the phone - closer to $200.

You are simply wrong.

Like I said, go to a Best Buy and ask the manager how much they make on the sale of an iPhone. It's nowhere even remotely close to $200.

Better yet, read this article:

http://www.reuters.com/article/2012/03/08/us-apple-retailers-idUSBRE8270ZN20120308

Just like I said, the profit margin for Best Buy is closer to $2 than $200.

 

[Henri Gaudier]

Dont talk crap.

No need to be rude Shill.

 

[Deako]

No need to be rude Shill.

He called me an idiot!

 

[wovel]

I never said it was either? Maybe you misread my post.

Lol. I said something was totally irrelevant and you seemed to correct me by saying it was insignificant.

Still how I read it, but ok

 

[TC25]

Pass on some of those savings you greedy corporate shysters.

Sad there 11 other uninformed people who upvoted your equally uninformed post. Talk is cheap. If you really believed in the Occupy Wall Street gibberish, you wouldn't buy anything from Apple.

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Just like I said, the profit margin for Best Buy is closer to $2 than $200.

Check with Puevlo, he/she believes both Apple and BB should not make a profit. Why? Because any profit is nothing more than greed.

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Just goes to show how hard Apple likes to screw over customers who want a few more gigs. Seriously the price they charge for 32 and 64 GB models is insane. They need to ditch the 16 GB model and start 32 GB at 200 dollars on contract, then at the very least make the 64GB 300 Dollars on contract.

I stopped buying the 32 GB version as I can't justify paying 100 dollars more for 16 GB of space. just insane. But then again this will probably be my last Apple iPhone.. loosing faith in the company and seeing these prices makes me loose even more.

Bye.

----------

Well said...the Apple fanboys/apologists out there don't seem to get it.

And some people don't believe in free market economics. Here's a simple truth. A product is priced according to what people are willing to pay for it. Don't like the price, don't buy the product. Simple solution.

 

[bbeagle]

You are simply wrong.

Like I said, go to a Best Buy and ask the manager how much they make on the sale of an iPhone. It's nowhere even remotely close to $200.

Better yet, read this article:

http://www.reuters.com/article/2012/03/08/us-apple-retailers-idUSBRE8270ZN20120308

Just like I said, the profit margin for Best Buy is closer to $2 than $200.

I just read your article and it states that Best Buy earns $100 on the sale of an iPhone. Nowhere near $2

 

[TC25]

So after about 6 - 8 months into the data contract it becomes profit for the carriers. Must be nice...

Then start your own cellular company. Oh, wait a minute, that takes capital, aka money.

----------

So what do you prefer, Apple having so much money they don't know what to do with it, giving back billions in dividends, or a cheaper iPhone?

Apparently it is all about stocks in these modern times. Greed, speculation and stocks keeps the world ticking. Until a new Wall Street collapse.

Another post from the uninformed.

 

[EvanBlive91]

Kind of ridiculous

When you consider the cost of manufacturing, licenses, research and everything else this is still nothing in comparison to the profit they are making from the higher capacity models. Considering apps are written with up to 5 different resolutions n can get almost 4x in size when going retina, you're forced to record in 1080 HD, 8MP pics, photostream eats a new ******* in your memory, at this point theyre forcing consumers to move to 32GB as near standard. Atleast go $200, $250, $300...im dissapointed in Apple for ushering in the $400 contract phone. They had balls doing it on an S upgrade too. Whatever in getting the 5 but cant help but feel Apple is too comfortable overcharging customers...

 

[AppleScruff1]

They should have raised the price so that they could make even more profit. All I care about is how much money Apple makes.

 

[yodaforum]

I want to know how does Microsoft get away with charging me £500 for MS Office suite and i know a box and CD cost less than £1 for the materials...it's disgusting.
how about the car manufacturers..is there much price difference machining out a 1.0L engine or a 3.0L engine? but they can charge £6,000 more for that model...sure there are usually other extras on the faster models but i wonder how much the parts breakdown is between a models cheapest and most expensive version?

i do agree that apple could close up the model prices a little though or just have the 32 and 64GB version selling at the 16 and 32GB price points.

 

[elec999]

What planet do you come from?

R&D is the most expensive part of building an iPhone. They constantly need to inprove the ios, which is also part of the cost.

 

[Mustafabaquari]

That is apple policy

You call it whatever but that is how apple is. It has the policy to not compete much in the current market. they feel that they will deliver people great products and people will be ready to pay double the average price for the alternate products. The take huge margins make great profits and that is what gives apple the momentum to keep developing great products.

 

[Lynn Belvedere]

I just read your article and it states that Best Buy earns $100 on the sale of an iPhone. Nowhere near $2

You should read it again. Best Buy makes $100 because AT&T gives them a $400 commission for signing up new customers.

Best Buy makes nothing from the actual sale of the phone.

 

[raf66]

There is a VERY simple answer for the apparent Occupy crowd among us: Don't buy Apple products. That wasn't very hard was it? The consumer has the power.

Those of you decrying Apple's profit margin are probably the same ones who believe auto union members deserve to make $75/hr. to windex the windows of a new car when it comes off the assembly line, have 4 weeks paid vacation, 3 weeks paid sick leave and a fully funded pension without having to personally contribute to it. (I'm sure those things wouldn't contribute to a product's cost any, right?).

As has been said here repeatedly, a company wishing to stay in business can only sell a product for a price the consumer is willing to pay for said product. No one is being forced to purchase an iPhone 5 of whatever configuration. The market is flush with smartphones. Go buy something else. The last I checked, the US is still a free market, capitalistic society (though I think there are some who would like to see that change).

 

[kdarling]

R&D is the most expensive part of building an iPhone. They constantly need to inprove the ios, which is also part of the cost.

As noted previously, R&D is the least expensive part, probably accounting for less than 3% of the retail price. iOS itself is likely about 2%.

Heck, some analysts have estimated that the entire project cost of making the first iPhone model was under $150 million.

 

[sagar4995]

would anyone have a similar source about what the component costs are for a samsung galaxy s3?? i was interested in looking at what profit margins samsung has, as compared to apple... thanks!!

 

[Renzatic]

They should have raised the price so that they could make even more profit. All I care about is how much money Apple makes.

You too, huh? The only thing that'd make me happier with Apple is if Tim Cook himself come over to my house to punch me in the face hard enough to break my nose before stealing my wallet.

You know, people. You're right to a point. Companies do mark up their products, and they do deserve to make money. But charging $200 more for $30 worth of memory? COMEON! Justifying a 70% markup is one thing, but 650%?

Guess I now know why they're the most profitable business in the world.

 

[subsonix]

would anyone have a similar source about what the component costs are for a samsung galaxy s3?? i was interested in looking at what profit margins samsung has, as compared to apple... thanks!!

It's obviously going to be in the same ballpark, nothing in there is exceptional.

 

[kdarling]

would anyone have a similar source about what the component costs are for a samsung galaxy s3?? i was interested in looking at what profit margins samsung has, as compared to apple... thanks!!

Both phones cost about the same to make (Samsung is monetarily on the same level as Apple when it comes to yearly chip buying power, although they probably pay less for royalties due to cross licensing).

Both phones have about the same retail price. However, Samsung wholesales for less. (This extra profit for the seller is why many stores and carriers tend to push the Galaxy over the iPhone.)

Due to the lower wholesale price, I believe that Samsung's gross profit margin for the Galaxy is about 35%, versus 50% for the iPhone. Throw in all the less expensive Samsung smartphone sales, and then double that with dumbphones, and their overall cell phone profit margin drops into the high teens, I think.

Interestingly, I've read that the opposite is true for tablets: Samsung tablet profit margins are supposedly higher than Apple's for the iPad.

 

[AppleScruff1]

You too, huh? The only thing that'd make me happier with Apple is if Tim Cook himself come over to my house to punch me in the face hard enough to break my nose before stealing my wallet.

You know, people. You're right to a point. Companies do mark up their products, and they do deserve to make money. But charging $200 more for $30 worth of memory? COMEON! Justifying a 70% markup is one thing, but 650%?

Guess I now know why they're the most profitable business in the world.

What I find to be pathetic is those consumers who defend this practice and are actually happy about it. Yet they complain if gas goes up a few cents or the cable company raises it's prices.