Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Nope - Apple is not greedy. To make profit - ANY company who makes hardware should really multiply BOM cost with 3-4x (BOM = Bill Of Materials) - that makes room for profits for Apple and their resellers - and makes room for marketing and R&D costs.

If a company does NOT charge 3-4 times BOM cost - you will usually find they go out of business quite quick.


Sigh......... I give up, again !!
 
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.

Shouldn't "evil" be in quotation marks, instead of "profit"? Anyway, labour, shipping and even R&D account for a very small amount of the cost per iPhone. Apple's net profit margins are over 20%, and that's after everything is taken into account. That's huge, especially for a hardware company.
 
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.
You're way off on your reply to that other member. He was saying to expect the usual comments here of Apple being greedy.
 
Btw, per Apple's last quarterly financial statement their gross margin was just under 40% and profit margin was 21.5%. For comparison, Microsoft's gross margin was 66.8% and their profit margin was 13%, but that includes the $10B write down of Nokia/restructuring costs. Add that $10B back and Microsoft's profit margin for FY2015 was 23.7%. Google's gross margin last quarter was 38.3% and their profit margin was 21%. Just a little context for those who think Apple's margins/profits are obscene.

They're terrible comparisons to make. Those two companies sell software and/or advertising. You may not think it, but they're in completely different sectors of the industry. Compare any other hardware company: sony, samsung, LG etc and you'll realise how unusual Apple's margins are in the industry.
 
  • Like
Reactions: Judas1
Wow $6.6B profit* in three days... forget lottery tickets I'm going to by apple stock!

*approximate, rounding down so allowing for almost $70M in R&D ;)
 
They're terrible comparisons to make. Those two companies sell software and/or advertising. You may not think it, but they're in completely different sectors of the industry. Compare any other hardware company: sony, samsung, LG etc and you'll realise how unusual Apple's margins are in the industry.


Apple sells hardware and software both... When you are buying an iPhone, it comes with software which is designed by Apple...
 
The 16GB over 32GB base is a pure profit (greed?) move. But there is some good logic behind it. I think this analysis is likely right on (it came out with the 6).

http://www.aboveavalon.com/notes/20...illion-in-2015-by-selling-16gb-iphone-66-plus

Eventually they need to go to a higher base model. Right now they are reaping the profit keeping it 16GB. With this plan, a good percentage of users step to 64GB (I do believe the 64GB model will be the top seller for the 6S). Then when they introduce 32GB base in the 7, some might step down, but they are banking that likely most will want to keep their space.

Apple can then do two things:
Introduce 32GB and keep the 64 and 128 the same for the same price.
or
they can double all the tiers as they have done in the past (this could be done in two stages with the above happening first, then double the top two).

Do this until 32GB is no longer adequate, rinse, repeat.
 
  • Like
Reactions: djang0
Btw, per Apple's last quarterly financial statement their gross margin was just under 40% and profit margin was 21.5%. For comparison, Microsoft's gross margin was 66.8% and their profit margin was 13%, but that includes the $10B write down of Nokia/restructuring costs. Add that $10B back and Microsoft's profit margin for FY2015 was 23.7%. Google's gross margin last quarter was 38.3% and their profit margin was 21%. Just a little context for those who think Apple's margins/profits are obscene.

And the profit margin of most businesses in the U.S. is closer to 5%.

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.

IF you have an iPhone 6 to trade, you might be able to get a FREE iPhone 6s - but pay for it over the next 24 months ... with crappy service and reception.
 
Kinda sucks how one of the cheapest components (Flash) is the one Apple cripple, seeing as it's one of the most important bits. I'm sure they'll prove us wrong with the iPhone 7, even 32GB base would be a massive improvement for users.

Which users?

I read a report recently from a developer that said only 17% of 16Gb users had less than 1Gb free. Or to spin that around 83% have more than 1Gb free. Most users on 16GB are the mom and pop time users, the corporate users, the elderly, the tech phobics. They use their devices in a basic manner, they don't shoot video, they don't download 1GB games. The majority (looking at available data) are just dandy with their 16GB.

Let's face it most people here want 32GB base as it will save them money, not because it's a smart business decision from Apple.


This bit of the article also made me chuckle:

"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,

I like the use of "irrelevant". $17 more for 16GB -> 64GB. Apple sells ~200 million devices a year. ~50% of which are the bottom storage tier, that's a $1.7 billion decision. Hardly irrelevant.

Most of these analysts would run a well a well oiled machine like Apple into the ground within a few years, as would the majority of forum members.

Last thing we want is a situation like Android manufacturers for Apple, where they make no money. That's when the users will start getting screwed.

Selfishly I would love a 64GB base model, but I can also see why it exists.
 
Steve said ''we don't ship junk''. Well, Tim clearly doesn't believe this since he's still selling the 16gb iPhone.
Maybe at that time, 16 was enough. Hell, maybe it was even a lot, like what 64gb is now. But times change, apps' size gets bigger and bigger and so do the photos and not to mention the video size when filming in 4K. Clearly Tim wants to ship junk, because that's what a brand new iPhone with 16GB of storage is.
 
Last edited:
This stuff is so stupid. It's just the cost of an iPhone sitting in the China assembly plant. Where's the R&D, Marketing, Sales, channel distribution costs?!?! Net profit is probably on a hundred or two, which I feel is perfectly legit.
 
[Queue posts about how this doesn't account for extensive R&D costs]

True, although Apple spends very little on R&D compared to other companies.

Heck, the entire original iPhone was done for only about $150 million, and half of that was spent on testing facilities.

Only this past quarter did Apple finally break past spending 4% of revenue on R&D for all their projects. (For comparison, Google spends over 13% of its revenue on R&D.)

Not to mention that the majority of R&D money these days is probably going into the Apple Car.
 
Apple makes billions every quarter. They keep getting richer and richer. I'm a huge Apple fan and a huge customer of Apple, not only personally, but corporately too. I'm glad they are rewarded for their quality and ingenuity. However, this was pure greed and you would think they could give their customers a break. Especially lower and middle class America. I hope this hurts them. As a dedicated customer for over 10 years having spent 100s of thousands of dollars they are pushing my limits. I have other options as much as I hate to go there. They probably sat around the table telling themselves, if we keep the 16GB we will take the extra profit and give ourselves huge bonuses this year.

Agreed, the base should be at 32GB. This was a stupid executive/accounting move. Shame on you Apple and shame on you Tim Cook. Would it be too much to help your customers out a bit?

Shareholders. Profits. Margins. Apple is a public company. There's a reason they've been beating revenue records on every new iPhone release. I believe they might be concerned they won't beat it once they up the base model to 32GB. These memory upgrades must have a high impact on those accounting numbers. It's all about the ASP.

Nevertheless, 16GB remains ridiculous for the customer with today's phone capabilities. Therefore I don't excuse Apple.
 
Last edited:
  • Like
Reactions: rgarjr and todhug
Apple doesn't owe us doing 64GB iPhone as standard. Yes, it's annoying, but technically totally doable. If you use everything via Cloud services, it is possible to use 16GB iPhone and barely use any storage.

Also, this is the equivalent of BMW making their 320i with a single exhaust pipe. BMW knows people want dual or quad exhausts, but if you want that, you gotta pay up and get the 335i.

What's incredible about the topic is the minimal change of cost when assembly is factored in. I'd rather pay up and have my iPhone Made in US or somewhere in Europe.

You clearly know little about the BMW lineup. The reason that BMW implements dual exhausts on the 335i / 435i and not on the lesser 320i/328i is because of the different exhaust systems needed for the turbo inline 6 used in the -35i models, the turbo inline 4 -28i models, and the less boosted -20i models. Do your research before posting, please.
 
Seems a lot for an iPhone. iPhone 5/S component cost were about 150$, I doubt it got that high for iPhone 6/S, unless they include the diluted cost of operation and manufacture.
 
I don't mind paying high prices for their superior hardware, what really leaves a bad taste in my mouth is the arrogance of $29 3ft. cables etc.....
Not an excuse but this is where most electronic retailers make their money - have you check for gold plated HDMI cables on Best buy?
 
Steve said ''we don't ship junk'' Well, Tim clearly doesn't believe this since he's still selling the 16gb iPhone.
Maybe at that time, 16 was enough. Hell, maybe it was even a lot, like what 64gb is now. But times change, apps' size gets bigger and bigger and so do the photos and not to mention the video size when filming 4K. Clearly Tim wants to ship junk, because that's what a brand new iPhone with 16GB of storage is.
The time for 32B
The 16GB over 32GB base is a pure profit (greed?) move. But there is some good logic behind it. I think this analysis is likely right on (it came out with the 6).

http://www.aboveavalon.com/notes/20...illion-in-2015-by-selling-16gb-iphone-66-plus

Eventually they need to go to a higher base model. Right now they are reaping the profit keeping it 16GB. With this plan, a good percentage of users step to 64GB (I do believe the 64GB model will be the top seller for the 6S). Then when they introduce 32GB base in the 7, some might step down, but they are banking that likely most will want to keep their space.

Apple can then do two things:
Introduce 32GB and keep the 64 and 128 the same for the same price.
or
they can double all the tiers as they have done in the past (this could be done in two stages with the above happening first, then double the top two).

Do this until 32GB is no longer adequate, rinse, repeat.

Thanks very logical article...if someone bought 64 now - Apple is hoping you come close to filling up so when iPhone 7 rolls in - you will feel the need to keep the same storage.
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.