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iPhone 5s Component Costs Estimated to Begin at $199
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Actually, with Flash Memory prices dropping Apple is reaching iPod vs MP3 player cliff. I had a Creative Nomad which cost like have the cost of an iPod for the same storage. It broke (30 day warranty) so I was pissed but still couldn't justify an iPod. Then Apple lower the cost of iPods like $100 or $200. Still cost more the Nomad but it was not totally screwing me than. Apple also sold a lot more iPods too. With SSD drives getting to $0.65 per GB vs over a $1.00 last year, Apple is either going to have to give more storage space or lower prices between models.
Apple can only charge so much of a premium that is not a Apple feature before it starts having a negative impact.
You don't know what your talking about. The iPhone 5S 16GBb costs Apple about $450 per phone. You're skipping R/D, software development, labor, shipping, packaging, design, etc, etc.
There's only one iPhone and as long as it's perceived that way Apple can charge as much as they want on upgrades.
No kidding. Some poeple have no idea about pricing and marketing.
Given the choice, I would wager most people would double or triple their storage for only $20 more. That means it's a benefit and you charge extra for that. The other part of it is why would you go through the hassle of carrying extra skus, inventory, etc. for only $20? You wouldn't, especially if everyone picks that model. So you need to price high enough that it provides value for some people but low enough that's it not considered egregious. Some companies manufacturer high ticket items they don't intend to sell much of because they want to sell you the lower model—the decoy effect at work.
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It's still just $19 more for the upgrade to 64 GB. That's not Apple's R/D, software development, labor, shipping, packaging, design, etc, etc. Same size and number of chips, just more GB inside for another $19.
That means the upgrade from 16 to 32 GB is ~$10 for Apple. That is 10x the component cost, with *zero* overhead. In fact selling a 16 GB model creates drag to selling more apps/music/videos down the road, nearly full NAND becomes slower and reduces customer satisfaction, and delays the upgrade to the next version of iOS when there isn't sufficient free space. I had to delete several large apps before iOS 7 would install, then reinstall them. 16 GB IS NOT ENOUGH FOR A PREMIUM PHONE IN 2013-2015. Sorry for shouting..
I am not sure how Apple calculates its COGS but most of the time manufacturers define it by the actual cost of materials (BOM) plus the freight and duties and does not include R&D, marketing, labor, etc. Gross Margins should be (Revenue - COGS)/ Revenue.
So in this case if the BOM is $199 and freight per unit is lets say $2-3 per unit then that's the COGS we should be using for Gross Margin and Revenue would be $649.
So in this case if the BOM is $199 and freight per unit is lets say $2-3 per unit then that's the COGS we should be using for Gross Margin and Revenue would be $649.
Again, cost has nothing to do with price. How much more does it cost Microsoft to produce a Windows Enterprise DVD than a Windows Home Basic Upgrade DVD (or whatever they are called now)? Effectively nothing. And yet they charge many times more.
Price is about consumer value, not component costs.
What I don't understand are all the people posting here that say Apple will never increase the base storage because it's too expensive. Or the people who say they don't want a storage upgrade since they don't want the increase in price. The $19 difference doesn't change the price on a $650 device much.
Employees eat and have families.
Plus, a broader color palette for Jony Ive to redesign the world doesn't come cheap.
Plus, a broader color palette for Jony Ive to redesign the world doesn't come cheap.
The article says component costs. Everything you said is not component costs. The component cost + all the costs you say = the actual cost of the phone to Apple to have made.
The article is correct in what it said.
All these analyst...
OMFG!! Apple has ripped $400 for 9 million people!
Anyway how did they estimate flash drive component increase just by mere $19?
Is he estimating based on the outside quality storage?
I can get flash storage of 16gb for $12 and the 64gb for about $30 outside. And they only last me 1 year with mishandling. My iPhone 4s has been with for 2 years despite my buttery hand.
OMFG!! Apple has ripped $400 for 9 million people!
Anyway how did they estimate flash drive component increase just by mere $19?
Is he estimating based on the outside quality storage?
I can get flash storage of 16gb for $12 and the 64gb for about $30 outside. And they only last me 1 year with mishandling. My iPhone 4s has been with for 2 years despite my buttery hand.
iPad Retina is $529 with a BIGGER Screen and BIGGER Battery and LTE antenna
why does a Phone cost $649 ?!?!
extra $120 for what?! WHAT?!
re-freakin-diculous !!
why does a Phone cost $649 ?!?!
extra $120 for what?! WHAT?!
re-freakin-diculous !!
Remember this does not account for yield. The 5c probably has a much higher yield than the 5. That beautiful chamfered design is probably a QC nightmare.
Well, look at Intel CPUs, an extreme version is faster by 100MHz but cost you $400 more
I'm not so sure that's a perfect example, the increased cost of the Extreme is probably due to the fact that so few of the chips being fabbed are good enough to be run at that level (given power, thermal, and stability overhead, I know you can overclock).
These days there is such little cost difference between the flash chips that it pretty much comes down 100% to the fact that Apple can charge and consumers will pay. I always get the smallest storage iDevice since I think the extra cost isn't worth it. Plus now everything is on the cloud for me. Everyone else can do the same