iPhone 5 Component Costs Estimated to Begin at $199

[elec999]

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.

I'm surprised the R&D costs of this phone is so low, was so low.

 

[raf66]

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.

Gas prices are not a good analogy. First, fuel is a necessity whereas a smartphone is a luxury/discretionary item. Second, consumers don't typically complain when gas prices go up a few cents. What they DO complain about is gas prices more than DOUBLING in a short amount of time ($1.75/gal. 12/08 v. $3.89/gal. 9/12). That's a 222% increase in less than 4 years. That type of increase on a necessary item will draw the ire of consumers every time. During that same or similar time period, the iPhone 3G was introduced ($199) and then the iPhone 5 was released ($199).

I absolutely understand that there are people who won't be able to afford the iPhone or will choose not to purchase it because they don't need a smartphone or believe there are other, less expensive smartphones in the market that will satisfy their needs. This is how free market capitalism works.

 

[AppleScruff1]

Gas prices are not a good analogy. First, fuel is a necessity whereas a smartphone is a luxury/discretionary item. Second, consumers don't typically complain when gas prices go up a few cents. What they DO complain about is gas prices more than DOUBLING in a short amount of time ($1.75/gal. 12/08 v. $3.89/gal. 9/12). That's a 222% increase in less than 4 years. That type of increase on a necessary item will draw the ire of consumers every time. During that same or similar time period, the iPhone 3G was introduced ($199) and then the iPhone 5 was released ($199).

I absolutely understand that there are people who won't be able to afford the iPhone or will choose not to purchase it because they don't need a smartphone or believe there are other, less expensive smartphones in the market that will satisfy their needs. This is how free market capitalism works.

I've never seen anyone brag about how much profit their electric company made. Or phone company. Or favorite clothing company. Or favorite restaurant. Only Apple customers put the companies needs ahead of their own. Any other company making these kind of profits would be considered thieves by the majority of those here. I like Exxon. I'd like to see them with a triple net profit of 40%. I'd gladly pay more for their gas. Does that make sense to you? Of course it doesn't. But to many Apple fans, substitute Apple for Exxon and it's an entirely different story.

 

[raf66]

I've never seen anyone brag about how much profit their electric company made. Or phone company. Or favorite clothing company. Or favorite restaurant. Only Apple customers put the companies needs ahead of their own. Any other company making these kind of profits would be considered thieves by the majority of those here. I like Exxon. I'd like to see them with a triple net profit of 40%. I'd gladly pay more for their gas. Does that make sense to you? Of course it doesn't. But to many Apple fans, substitute Apple for Exxon and it's an entirely different story.

I don't believe you'd find one person on here who puts Apple's needs ahead of their own. That's a rather silly statement and does nothing more than create a straw man argument.

Let's not pretend that Apple is the only company that makes incredible profits by marking their prices up considerably. For instance, you mention clothing companies and restaurants. Let's talk about Nike, Abercrombie & Fitch, Aeropostale and Hollister. Do they really need to charge what they do for their products? And last I checked those are some pretty popular brands that have a loyal following who think nothing of purchasing $150 sneakers or $175 pair of jeans. Restaurants? Do you have any idea how much mark up is in the retail food industry? The list goes on and on. Public utilities? Well, we're stuck with what they charge so there's very little the consumer can do but again, those are necessary items rather than luxury items.

You throw around the word "thieves" like it's somehow illegal, immoral or both to make a profit. A thief can only steal from you if you give them the opportunity to do so. Not happy with Apple's profit margin? Don't buy their products. Apple doesn't have a monopoly on a vital and absolutely necessary consumable good.

Thankfully we live in a country wherein individuals and companies have worked their butts' off and invested millions or billions of dollars to create an item or items that may or may not be a hit with consumers. Sometimes they get a winner, sometimes they don't. Apple hit a home run with the iPhone, but there are other products that they've invested time/effort/money in that never made it to production. This is the same for ALL successful companies. It's the old risk/reward dance and frankly I'm glad that there are people and companies that will engage in this dance.

Again, there are a plethora of smartphones on the market, many of which could be purchased on a subsidized carrier contract for less than lunch at a fast food restaurant. Have at it. Or better yet, go out and invent/design/create/manufacture/sell your own widget and charge people no more than what it cost you. Do it simply for the common good of mankind.

 

[AppleScruff1]

I don't believe you'd find one person on here who puts Apple's needs ahead of their own. That's a rather silly statement and does nothing more than create a straw man argument.

Let's not pretend that Apple is the only company that makes incredible profits by marking their prices up considerably. For instance, you mention clothing companies and restaurants. Let's talk about Nike, Abercrombie & Fitch, Aeropostale and Hollister. Do they really need to charge what they do for their products? And last I checked those are some pretty popular brands that have a loyal following who think nothing of purchasing $150 sneakers or $175 pair of jeans. Restaurants? Do you have any idea how much mark up is in the retail food industry? The list goes on and on. Public utilities? Well, we're stuck with what they charge so there's very little the consumer can do but again, those are necessary items rather than luxury items.

You throw around the word "thieves" like it's somehow illegal, immoral or both to make a profit. A thief can only steal from you if you give them the opportunity to do so. Not happy with Apple's profit margin? Don't buy their products. Apple doesn't have a monopoly on a vital and absolutely necessary consumable good.

Thankfully we live in a country wherein individuals and companies have worked their butts' off and invested millions or billions of dollars to create an item or items that may or may not be a hit with consumers. Sometimes they get a winner, sometimes they don't. Apple hit a home run with the iPhone, but there are other products that they've invested time/effort/money in that never made it to production. This is the same for ALL successful companies. It's the old risk/reward dance and frankly I'm glad that there are people and companies that will engage in this dance.

Again, there are a plethora of smartphones on the market, many of which could be purchased on a subsidized carrier contract for less than lunch at a fast food restaurant. Have at it. Or better yet, go out and invent/design/create/manufacture/sell your own widget and charge people no more than what it cost you. Do it simply for the common good of mankind.

I've read this forum almost daily for a year and a half. I have seen and still see ample evidence of what I posted. Never have I heard of people bragging about how much profit a company makes except on an Apple forum. There is no company in the tech industry that comes close to Apple's profits. And your clothing and restaurant examples are chump change compared to Apple. And I'll bet that if you go to a clothing forum no one will be bragging about how much money Nike, et al are making. Normal people complain about prices, Apple loyalists defend and make excuses for them.