iPhone 6s Plus Component Costs Estimated to Begin at $236, $16 More Than iPhone 6 Plus

[MacRumors]

IHS iSuppli has once again taken apart the newest set of iPhones in an attempt to come as close as possible to estimating the actual component cost of the new devices. According to IHS iSuppli's teardown of the iPhone 6s Plus, the bill of materials for a 16 GB version comes to $231.50, with manufacturing costs and other minor items raising the overall price slightly to $236.

One of the biggest areas of increased cost is related to 3D Touch, which adds about $10 to the overall component cost of the iPhone 6s Plus when combined with Apple's Taptic Engine used to fuel the new feature. It's these improvements that have boosted the new iPhone 6s Plus to cost around $16 more to manufacture than last year's iPhone 6 Plus, according to IHS Technology senior director of cost benchmarking services, Andrew Rassweiler.

"3D Touch and Apple's Taptic engine are among the more notable feature upgrades found in this latest round of iPhones," said Rassweiler. "With each generation the company makes measured, incremental technology improvements to its iPhone line, and this time around those changes are increasing Apple's per-unit material cost."

Overall, the most expensive aspect of the new iPhone 6s Plus is its display, with the addition of 3D Touch slightly increasing the component cost to $52.50 this year. Other high-cost components include the iPhone's new 12-megapixel rear camera and 5-megapixel front-facing camera that together are estimated to cost $22.50, and the A9 chip at $22.00. IHS also points out the incremental cost differences between each step-up in memory capacity, which sees a small component cost difference when in comparison to Apple's $100 jump between capacities like 16 GB and 64 GB, for example.

"NAND Flash is now so cheap it's almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step up in memory capacity," Rassweiler said. "For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but Apple charges iPhone buyers $100 more for the increased memory. This is part of Apple's ongoing strategy to improve profits by selling a product mix that is heavier in the higher-end iPhones."

Overall, IHS iSuppli's teardown concluded that the iPhone 6s and iPhone 6s Plus see most of their value additions in the form of overall durability for the new devices. This is thanks to new components like the 7000 Series aluminum case, an upgraded Gorilla Glass 4 cover, as well as "additional gaskets and seals" that IHS says improves the water resistance of the new iPhones, which has been studied in the days since release.

Earlier in the year, Apple CEO Tim Cook went on the record during one of the company's annual earnings calls, denouncing component cost teardowns like IHS iSuppli's of the iPhone 6s Plus. "I've never seen one that is anywhere close to being accurate," Cook said.

Such estimates do not take into account an array of costs, including research and development, software, and licensing costs, making profit margins appear much larger than they actually are. And given the proprietary nature of many of the components, cost estimates can be rough. The estimates can, however, be somewhat useful in comparing differences between generations to get a general idea of the potential cost impact of hardware changes.

Article Link: iPhone 6s Plus Component Costs Estimated to Begin at $236, $16 More Than iPhone 6 Plus

 

[Shanpdx]

32GB should be at the base.

 

[CB1234]

Cue the comments ====== Apple is greedy =======

 

[ThatTechGuy]

[Queue posts about how this doesn't account for extensive R&D costs]

 

[Tankmaze]

NAND Flash is now so cheap it's almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step up in memory capacity," Rassweiler said. "For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone

Damn.... 16 GB iPhone on the 6s is more of push for people to buy the higher margin 64GB.

 

[Kissaragi]

Here we go again.....

 

[AppleWarMachine]

with the phone costing more, I'm glad Apple didn't raise the price (now that would be greedy)

 

[ck2875]

I'm really impressed that Apple was able to simply walk into to RadioShack and buy all these parts for ~$236

 

[xmlninja]

These costs doesn't include the price and effort put in to developing the actual components. Without that work, there wouldn't be any components in the first place.

 

[jkichline]

Cue the comments ====== Apple is greedy =======

No, Apple is a business... a corporation... and the purpose of a corporation is to "increase shareholder wealth". If you think Apple is greedy, then you don't understand capitalism (whether that's good or bad). They are also not greedy simply because you don't *need* to buy what they are selling. Heck, you can get a great Apple device for free now with a mobile plan. It think they are going out of their way to make them affordable.

 

[Tubamajuba]

[Queue posts about how this doesn't account for extensive R&D costs]

As long as people think that R&D, facility maintenance, labor, shipping, and other costs are free, those comments will be necessary.

And yes, that doesn't include that evil "profit" thing that companies account for.

 

[Traverse]

[Queue posts about how this doesn't account for extensive R&D costs]

Speaking as an accountant, these non-cash flow expenses can be significant and are often ignored since R&D is expensed and not capitalized as part of WIP or FG inventory. While surely Apple is making incredible (almost excessive) margins, it's not as simple as "$800-236 = 564 of rip off!!!"

 

[nolankvn]

I'm really impressed that Apple was able to simply walk into to RadioShack and buy all these parts for ~$236

They got in on all those going out of business sales.

 

[Scrub175]

I didn't see the new aluminum alloy cost for the case mentioned. The change should have accounted for a small price increase in matierals as well.

Clarify, it was stated there were upgrades but no amounts assigned to that increase. It was speculated that there would be additional cost based on the use of the new alloy.

 

[kahkityoong]

Can't believe those cheap bastards have the nerve to sell them at more than $236

 

[vertsix]

I can already see Tim Cook weeping about the margins.

 

[zone23]

That's it next year I'm building my own and its going to start with 32gb.

 

[downpour]

Wouldn't the cost of the components depend on how many Apple are buying? Given the massive quantities involved, the individual phones probably cost Apple a lot less than this. Their real costs are R&D, logistics, marketing, etc.

 

[CB1234]

No, Apple is a business... a corporation... and the purpose of a corporation is to "increase shareholder wealth". If you think Apple is greedy, then you don't understand capitalism (whether that's good or bad). They are also not greedy simply because you don't *need* to buy what they are selling. Heck, you can get a great Apple device for free now with a mobile plan. It think they are going out of their way to make them affordable.

Urm.... Errr..... 'cough cough'... I think you completely misunderstood my post....

 

[yaxomoxay]

$236? Greedy. Just Greedy. They should sell it for $236.01 at most.

 

[yaxomoxay]

Speaking as an accountant, these non-cash flow expenses can be significant and are often ignored since R&D is expensed and not capitalized as part of WIP or FG inventory. While surely Apple is making incredible (almost excessive) margins, it's not as simple as "$800-236 = 564 of rip off!!!"

Wouldn't be marketing part of the equation too?

 

[Glassed Silver]

Cue the comments ====== Apple is greedy =======

Well they are, happy now?

Glassed Silver:mac

 

[unplugme71]

That $10 part is probably $400 retail if we wanted to buy one. Perks of mass quantities

 

[dmula]

Ahhhh, I was waiting for this article... where is my popcorn?

 

[Lobaeux]

Here comes analyst Me Wong releasing some paper today stating that Apple's margins are going to be significantly less due to the enormous increased cost of the 6S Plus, this will in turn drive the share price down because instead of Apple making and estimated $23 Trillion in the 4th QTR, they'll only make $22.8 Trillion, and then will take a further hit when Apple "only makes" $27 Trillion for the 4th QTR.