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iPhone 7 Component Costs Estimated to Start at $220

I really don't understand the complaints here. Apple is a business and as a business their job is to make as much money from a product as the market will bear. I'd believe a profit margin of 30-45%. I think the Iphone is priced decently, it's expensive but not outrageously so. Now the apple watch and the current mac book pro are a different story. Don't even get me started on the watch bands.
 
garirry said:
You'd think that with half a trillion dollars, they might use a little more of their own money for research and stuff and make the iPhone cost closer to its production cost.
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And why would you think this...? They are supposed to price the phone to maximize profit, which they did.
 
R&D Cost? Marketing cost? Shipping cost? Storefront overhead? None of that is ever brought up

MacRumors said:



Exploded_View_Apple_iPhone_7-250x299.jpg
iPhone 7 component costs are estimated to start at $219.80, which is $36.89 higher than iPhone 6s, according to a preliminary teardown [Excel] of a 32GB model by IHS Markit.

The display remains the most expensive component, costing an estimated $43, followed by an Intel modem and other baseband chips worth an estimated total of $33.90.

Apple's quad-core A10 Fusion chip is the third most expensive item on the bill of materials, costing an estimated $26.90. Meanwhile, the larger 1,920 mAh battery is said to cost just $2.50.

The larger rear-facing iSight camera and improved 7-megapixel front-facing FaceTime camera cost a combined $19.90, according to IHS Markit. Electromechanical components, including the Taptic Engine, antennas, connectors, microphones, and stereo speakers, cost an estimated $16.70 combined.

iPhone 7's 2GB of RAM supplied by Samsung, and 32GB of flash storage supplied by SK Hynix, are estimated to cost a combined $16.40. An audio codec and audio amplifier supplied by Cirrus Logic, an NFC controller supplied by NXP, a Bosch Sensortec-made barometer, along with an accelerometer, gyroscope, Touch ID, proximity sensor, and other sensors, cost an estimated $14 altogether.

The accessories included in the iPhone 7 box, including a Lightning-to-USB cable, Lightning-to-3.5mm audio adapter, EarPods with a Lightning connector, and 5W USB power adapter cost an estimated $11.80 combined.

IHS raises Apple's total cost to manufacture the iPhone 7 to $224.80 after adding $5 in "basic manufacturing costs" related to assembly, insertion, and testing. A 32GB iPhone 7 Plus costs $649 as a point of comparison.

However, the bill of materials does not factor in costs related to, among other things, research and development, software, licensing costs, and transportation. The accuracy of the component costs is also questionable. Last year, Apple CEO Tim Cook said he has never seen a cost breakdown that is "anywhere close to being accurate," adding that they are generally "much different than the reality."

At least in comparison to IHS estimates for previous iPhones, the iPhone 7's bill of materials is seemingly costlier than the iPhone 6, iPhone 5s, and iPhone 5, each estimated to start at $200, and the iPhone SE at $160.

Article Link: iPhone 7 Component Costs Estimated to Start at $220
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AgentAnonymous said:
Either buyer's remorse (you don't want to mentally accept that Apple is ripping you off), or you drunk the fanboy kool-aid. Removing the headphone jack didn't lower the margins it saved them money.
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at what point did I ever mentioned the headphone port?

this conversation has nothing to do with the headphone port. Headphone port is the very reason I will not buy a future iPhone.
 
nooaah said:
They used the money to provide a lot of free salt for people, at least.
[doublepost=1474414117][/doublepost]
Google is your friend. They're in the very top tier of research spending.
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I already knew answer. ;) Being in the top tier of research spending is not the same as "Apple spends more R&D per product than any other company." That's the quote I was responding to earlier. I was trying to see if the poster was hanging on that "per product" caveat to support his assertion. Apple's R&D spend ranked at #18 in the Top Twenty in 2015. Before that, they never ranked in the Top Twenty.
Info can be found here.
 
danakin said:
Before people lose their spit over how much profit the Cupertonians rake in per device, stop to consider costs for:
  • Research and Development
  • Marketing
  • Shipping
  • Taxes
  • Legal
  • Regulatory compliance
  • Facilities (leases and sundry expenses)
  • Salaries and benefits
  • Warehousing
  • Product testing
  • Event planning and management
  • Internal and Retail training
I'm sure there are others but those are at the top of my head.
Also if customers and/or suckers (depends on your perspective) choose to dole what what they're asking for, then keep charging what the market will bear. Capitalism folks!
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You are right there so many costs that aren't included in those numbers. But they did save on some areas with this phone and could save more still!
  • Research and Development - Boy did they save on the iphone 7! Yes the A10 is good, but we didn't see a giant leap. I really think most of their R&D will show up on the iphone 8, the iphone 7 was just an afterthought
  • Marketing - I only recently saw an Ad i liked. Quality has dropped! Hopefully they are paying less for those crappy ads
  • Taxes - The taxes they avoid in Ireland?
  • Legal - This is one thing I really dislike. Patent trolls going after Apple and other tech companies. Patent trolls were the ones that really messed up face time.
  • Salaries and benefits - If they fire Tim and Angela, they would save millions! They need to appoint Craig F as CEO!
  • Event planning and management - can't stand seeing Tim dance and talk about how revolution his mediocre products are! His events are so boring. They need a real leader up there!
 
69Mustang said:
I already knew answer. ;) Being in the top tier of research spending is not the same as "Apple spends more R&D per product than any other company." That's the quote I was responding to earlier. I was trying to see if the poster was hanging on that "per product" caveat to support his assertion. Apple's R&D spend ranked at #18 in the Top Twenty in 2015. Before that, they never ranked in the Top Twenty.
Info can be found here.
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So instead of correcting him you decided to try to make a fool of him. Got it. A publicly traded company being greedy is like a dog barking at a vacuum cleaner. It's kind of what they do.
 
Gasu E. said:
Cue the "greedy Apple" illiterati.
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A lot of people continue to fail to understand that they are also paying for the cost of the facilities that design and produce the iPhone, the employees that create it, and the shipping and logistics behind getting the devices out to people who want to buy it. There's very little profit that comes out of Apples hardware and Apple makes the most from software.
 
And as usual iPhone's BOM comes in cheaper than that of Samsung Galaxy flagships. For example, Galaxy S7's BOM is $255 (source) and Note 7 must be higher (it has better hardware).
 
Michael Scrip said:
Does anyone estimate material costs in other industries?

How much are the components to build a 2016 Honda Accord? Or a Dell XPS 13 laptop?

And does it really matter? Like others have said... there's more than just the bill of materials...
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It is a closely guarded secret that car dealerships buy cars from their manufacturers for less than 50% of the MSRP (sticker price).

How do we know this for sure?

Hackers have broken into car dealer's invoice system and discovered this.

Of course, the entire auto industry vehemently denies this.

But knowing how little these phones cost get me thinking car dealers do indeed get their new cars at 50%.

This article reveals the dirty little secret about buy a car vs. leasing a car:

http://www.truthin7minutes.com/leasing-a-car/
 
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These breakdowns are all but meaningless. You might as well claim that the cost of Photoshop is $0.01 for the download bandwidth while ignoring the R&D.
 
2b1ask1 said:
It is a closely guarded secret that car dealerships buy cars from their manufacturers for less than 50% of the MSRP (sticker price).

How do we know this for sure?

Hackers have broken into car dealer's invoice system and discovered this.

Of course, the entire auto industry vehemently denies this.

But knowing how little these phones cost get me thinking car dealers do indeed get their new cars at 50%.

This article reveals the dirty little secret about buy a car vs. leasing a car:

http://www.truthin7minutes.com/leasing-a-car/
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Wow! Thanks! :)
 
nooaah said:
So instead of correcting him you decided to try to make a fool of him. Got it. A publicly traded company being greedy is like a dog barking at a vacuum cleaner. It's kind of what they do.
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Nope, you're wrong. I challenged his assertion to get him to use google as a friend. You know, the same suggestion you gave me.;) If I was to make a fool of someone I'd do it by putting shoe polish on their binoculars.
 
To the naysayers... put $200.00 cash in a box, shake it up and see how easy it is to pull out an iPhone 7. Then, you might find the missing "costs" that are supposedly, nefariosuly showing up in the retail price.
 
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What I find crazy, is the fact flag ship smartphones from the likes of apple and samsung etc haven't went down in price by much. even though the components themselves have revolutionised the last 3 or so years.

Infact it's only went up
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djgamble said:
So buying the components as raw components (unassembled...etc) would cost about 1/4 of the coat of the product. On top of that you've got:
- Software development (OS and 3rd party apps)
- Marketing
- Manufacturing/assembly
- Design/engineering/testing...etc (LOTs of staff)
- Distribution costs

Apple's phone is in line (if not cheaper than) other flagship phones. They NEED to spend a lot of this money so that they don't have... I dunno... exploding batteries. That's what happens when you go cheap on engineering and testing.

I honestly don't think Apple's margin is THAT high. I reckon they charge maybe twice what it costs them to fully produce each phone. They NEED this buffer to properly support the products, research new ones and ensure the quality of the phone is fit for purpose.

If anything, I'm quite happy with the margins they are making. IMO you'll probably find that proportionately this is a pretty good mark-up compared with a lot of other products you take for granted.

Also, it's nothing like the mark-up on say a Louis Vuitton handbag. Pretty sure if you broke one down it would be something like:
- Leather... $10
- Machine sewing/thread... $0.05
- Research/design... $0.05 (no real innovation there)
- Consumer price... $20,000

Apple's not THAT bad.
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They arent as bad as Louis Vuitton, although when you look at the cost of their leather phone cases and apple watch bands....they are up there.
 
Kaibelf said:
Go become the CEO and execute your vision then, instead of lecturing them on how they should spend their money.
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Agreed. A lot of forum members seem to think they can manage a Billion dollar company better than Apple can. Imagine that.
 
Another thing is...
Today's ip7+ & IPad Pro definitely are Mac Mini replacements for a lot of people. The current crop of iDevices are formidable consumer level computers on their own.

For $1000 you get an amazingly fast pocket computer that does so much more than a MacMini (granted, within the restrictive walls of iOS), that the top of the line Mac Mini in comparison seems like a big rip.

Granted iOS can't run heavy guns software like 3D modeling, pro video editing, Photoshop, Dreamweaver etc etc, but for what most people do with a Mini, they can do it equally well on an iPhone 7 plus.

So what I'm getting at here is.... It's not so much what's inside a device that determines its final selling price, but what it can do compared to other gadgets.
 
now i see it said:
+ 500 million R&D
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You're not wrong. But when you figure Apple sells about 100 million phones a year, five or take, that R&D value per device is whittled down to a mere $5. Lets call the cost an even $300 by rounding up very generously. Apple still more than doubling their money here. Not too shabby!

By the way. Not a complaint or a gripe or whatever. Just some napkin math fun. :) felt I had to say that for people who might read into it.
 
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