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iPhone 7 Component Costs Estimated to Start at $220

smacrumon said:
Read above, three up. By the way, I'm sure you don't read every post ever written. Users here have stated Apple's profit margins are tiny. Which is just false.
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No I don't read every post (thankfully). I'm a scientist and cannot publish my research or make a claim in a paper without citing evidence or previous research. Of course MR forums aren't as rigorous as peer-reviewed research but if you make a statement like that (i.e., what others and I see as an outlandish claim) you have to back it up. That means you have to "trawl past posts" even though you don't want to. Once you provide evidence, I will happily change my stance. If you don't want to provide evidence, that's fine, but your argument will not be taken seriously. Evidence drudged by trawling will let us know you aren't just trolling. :)
 
I'm fine with cost to produce vs msrp. What is not fine is the trade-in value you get for your current phone. Why not just offer up more money for trade-in's if the device is in good condition. I would upgrade to the 7+ if they had a worthwhile trade-in offer for my 6s+, but $315....seriously?
 
ineel said:
Its not at all irrelevant, this type of information is used by investors as another factor in deciding to buy/sell apple. Some investors see this as apple no longer having the same margins as previous years while others are seeing it as apple investing more into their products being more competitive and possibly increasing sales as a result. It doesn't matter how much intel or whoever paid to make these product, it matters how much apple is spending per phone.
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Big money investors aren't using this information to determine anything. Big money investors (mutual funds and guys like Icahn) are paying analysts for the real information. This information isn't available to the general public. The information coming from this firm (IHS Markit) is likely way off the mark (according to the CEO, who can't lie about financials). No one, outside of Apple truly knows the cost of components in an iPhone. The analysts that have good models and supply chain information would certainly not share that information out on the Internet.

Small investors using this information are just pawns for the big money guys to manipulate. These reports are used to generate sentiment on AAPL to move the stock in a certain direction.

You're certainly entitled to base your financial decisions on such reports, but I personally would not.
 
jonnysods said:
They aren't a charity.
[doublepost=1474417769][/doublepost]

Labor costs? Logistics? Testing? It costs a lot more than $200.
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If all the annual overheads associated with the iPhone come to $10 billion and they sell 100 million phones, that amortises to $100 per phone. If they sell more, the figure is less.
 
This same nonsense every year. It's a bit like talking about the value of a dog by how much you could sell the fur for if you killed it.

It really doesn't matter if the components in an iPhone are worth $2 or $2000. The phones cost what they cost, there are millions of dollars in R&D, marketing, lawyers to avoid paying taxes, and so on. And they have not even factored in cost of assembly, shipping, retail space, warehousing, and on and on.

I don't care what every component of my car cost, I care what I can buy the car for. I don't care how much the parts of my watch cost. None of it matters. It is not information that has any purpose, and frankly they could be off quite a bit.
 
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ZCT said:
This same nonsense every year. It's a bit like talking about the value of a dog by how much you could sell the fur for if you killed it.

It really doesn't matter if the components in an iPhone are worth $2 or $2000. The phones cost what they cost, there are millions of dollars in R&D, marketing, lawyers to avoid paying taxes, and so on. And they have not even factored in cost of assembly, shipping, retail space, warehousing, and on and on.

I don't care what every component of my car cost, I care what I can buy the car for. I don't care how much the parts of my watch cost. None of it matters. It is not information that has any purpose, and frankly they could be off quite a bit.
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It does matter. Wouldn't you like to know how Apple's pricing compares to others? Everyone pays the same costs but not everyone can charge the same and get the same profit. The best way to compare is to use profit margins. Apple is and always higher than their competitors. They are not ripping people off but have established a brand that justifies the premium. But don't think they are not charging you more than anyone else could or would.

14a7fa1b0a8f47b8f383c9bba6ae94dd.jpg
 
neuropsychguy said:
No I don't read every post (thankfully). I'm a scientist and cannot publish my research or make a claim in a paper without citing evidence or previous research. Of course MR forums aren't as rigorous as peer-reviewed research but if you make a statement like that (i.e., what others and I see as an outlandish claim) you have to back it up. That means you have to "trawl past posts" even though you don't want to. Once you provide evidence, I will happily change my stance. If you don't want to provide evidence, that's fine, but your argument will not be taken seriously. Evidence drudged by trawling will let us know you aren't just trolling. :)
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Interestingly my background is one of science as well. A reminder to you not to jump to conclusions and suggest I was trolling, I wasn't. What I mentioned was true and correct. It certainly wasn't outlandish. You might not have experienced the comments, but I have, and my experience is valid without having to resort to producing hard evidence. People in the forums mention Apple's profit margins are high and they also mention they are low. I've read both. This isn't a scientific paper being submitted for inclusion in a journal. If it was, I'd trawl back through posts. Get some perspective into the discussion you make please.
 
$225 in materials for $650 product is competitively priced.. little to no apple tax.

seems like with the phone, they're more about making a high-dollar product and selling tons of them.. whereas with the mac, sell less but add a little namsayin on there.
 
ZCT said:
This same nonsense every year. It's a bit like talking about the value of a dog by how much you could sell the fur for if you killed it.

It really doesn't matter if the components in an iPhone are worth $2 or $2000. The phones cost what they cost, there are millions of dollars in R&D, marketing, lawyers to avoid paying taxes, and so on. And they have not even factored in cost of assembly, shipping, retail space, warehousing, and on and on.

I don't care what every component of my car cost, I care what I can buy the car for. I don't care how much the parts of my watch cost. None of it matters. It is not information that has any purpose, and frankly they could be off quite a bit.
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Exactly spend a few hundred million in r and d, commit to the manufacture of 50 million and viola component cost is $225 or so. Easy peasy anybody can manufacture a phone for $225.
 
Dmunjal said:
It does matter. Wouldn't you like to know how Apple's pricing compares to others? Everyone pays the same costs but not everyone can charge the same and get the same profit. The best way to compare is to use profit margins. Apple is and always higher than their competitors. They are not ripping people off but have established a brand that justifies the premium. But don't think they are not charging you more than anyone else could or would.

14a7fa1b0a8f47b8f383c9bba6ae94dd.jpg
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To what end?

At the end of the day, the truth of the matter is that no other company can replicate the user experience of the iPhone in its entirety. So it's pay or do without. At the end of the day, I am paying for Apple's expertise in putting those parts together in a manner which affords me the unique user experience that I prefer.

What does it matter to me if the Note 7 costs more in parts and has a lower profit margin? Especially when it is becoming increasingly clear that a smooth UI is more than just cramming as much ram and cores into your phone as possible.
 
smacrumon said:
Sorry not taking up the challenge to trawl past posts, it has occurred a number of times commenters stating Apple's profit margins are tiny. Anyone who understands business even on a rudimentary level know Apple operates with huge profit margins.
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No need to take up any challenge or check. You know you will not find any, because your statement is made up or it was made as a joke you didn't get.

EVERYBODY on MR who is Apple interested knows that Apple makes good profit margins.

Nobody has the right to decide whether they are HUGE, GREEDY, EXCESSIVE etc.etc.
Apple is a business and they can charge whatever they want, if they can get it.

Clearly if you, I or anybody could make a product for $ 10 and get $ 500 for it, we (at least I) would neither feel guilty of overcharging or change pricing. Whatever the market gives, businesses take.

Again, Apple many times deserves criticism, but let's stay fair and not make up stories.

BTW: Did you see another poster in this thread questioning your statement? (Proving my point)
 
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Thunderhawks said:
No need to take up any challenge or check. You know you will not find any, because your statement is made up
or it was made as a joke you didn't get.
EVERYBODY on MR who is Apple interested knows that Apple makes good profit margins.

Nobody has the right to decide whether they are HUGE, GREEDY, EXCESSIVE etc.etc.
Apple is a business and they can charge whatever they want, if they can get it.

Clearly if you, I or anybody could make a product for $ 10 and get $ 500 for it, we (at least i) would neither feel guilty of overcharging or change pricing. Whatever the market gives, businesses take.

Again, Apple many times deserves criticism, but let's stay fair and not make up stories.

BTW: Did you see another poster in this thread questioning your statement? (Proving my point)
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I agree, the margins are large. BUT my statement was not made up. You are suggesting I'm a liar and being dishonest, which I am not. There were at least three occasions in the past 9 months members here had said Apple's margins are tiny. That's all.
 
smacrumon said:
I agree, the margins are large. BUT my statement was not made up. You are suggesting I'm a liar and being dishonest, which I am not. There were at least three occasions in the past 9 months members here had said Apple's margins are tiny. That's all.
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3 out of 10,000s 0.0003% of posts in 9 months should tell you that these posters were either joking or just trying to stir the pot of negative Apple hate.

Plus, you even say you agree that Apple margins are not tiny.

So, why repeat false info, just to take an under the belt jab at Apple?

What I do not get in general is why people who hate Apple products come to MR to engage in negative discussions trying to rip them for every little thing.

There are the NO INNOVATION posters who themselves never have anything to suggest or created and won't give Apple its due for improving their products. It is just the way they do things.

The iPhone 7 may not have MUST HAVE features, but it is an amazing product.

The current MBPs maybe long in the tooth, but Apple decides when they will launch the next versions and what is in it. In the meantime those who can't wait should buy what fits their needs.

Am I happy that there is no longer a 17" MBP or we can no longer tinker in our machines, no, but I adjusted the way I work and use my MBPs.

Plenty of other examples.

FREE OS upgrades, no good, having to wait for a product (OMG) etc.

Produce in USA (Uneducated jibberish without educating oneself, about labor markets and all the problems that come with owning a factory or running one in USA)

Apple makes great products which last. When something is wrong MOST of the time they fix it as fast as possible. (I have had some issues where they didn't, despite it being their fault, but then I do not expect perfection and warranty has to end some time)

We are on this planet for such a short time, that I refuse to accept negativity as a means to help making things better.

I get that any change is hard for humans to accept, but the way we work and live today and the tools we have to do so are just amazing.

As I am older, I have seen a lot of technology. Good and bad.

I have no benefit from knowing sales numbers, market shares or act as if I got personally wounded, because somebody thinks SAMSUNG has a better product or they prefer ANDROID.
(It does irk me that they copy a lot, but so does everybody, incl. Apple)

Let's use what we have to be positive.
 
im_to_hyper said:
R&D Cost? Marketing cost? Shipping cost? Storefront overhead? None of that is ever brought up
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Because (R&D aside) marketing cost, shipping cost, storefront overhead etc. do not add value to the product. They are
the dead weight you have to pay to get the product to the customer. High component costs are a measure of the quality of the product. High marketing cost, shipping cost, storefront overhead are a measure of the company's inefficiency. The argument with marketing cost is a week one. Why would you want to factor it in? It's like saying the value of the product depends on how much money you spend to persuade the customer to buy it, rather than on how much money it cost to make it.
 
Abazigal said:
What does it matter to me if the Note 7 costs more in parts and has a lower profit margin? Especially when it is becoming increasingly clear that a smooth UI is more than just cramming as much ram and cores into your phone as possible.
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Note 7 costs more in parts and has a lower profit margin"" - what? are you seriously? it's your mind, another users can think different)
p.s.: i think same as you
 
flat five said:
$225 in materials for $650 product is competitively priced.. little to no apple tax.

seems like with the phone, they're more about making a high-dollar product and selling tons of them.. whereas with the mac, sell less but add a little namsayin on there.
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margin for brand + software, it is normal in our world
 
Michael Scrip said:
The money they "saved" by not ordering 50 million headphone jacks was put into ordering 50 million of the new larger stronger Taptic Engine assemblies. Or whatever.

Ugh... I hate articles like this. Every armchair supply expert goes crazy :)
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<citation conveniently missing>

If you think they didn't save money you're being naive.
 
Thunderhawks said:
Nobody has the right to decide whether they are HUGE, GREEDY, EXCESSIVE etc.etc.
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actually, yes we do. As the consumer, we are the very people who get to decide if we believe the price of admission to a product is too much for that product or not. NOT the company to tell us.

That is the very nature of market economics. The Market sets the value, NOT the enterprise. The enterprise can produce an offer to sale at a certain value and if the consumer believes it to meet their own required value, then either purchase, or if it doesn't meet their perceived value, Not purchase it.

that not purchase decision can be because one sees the asked price as too much for that product. the consumer then has everyright to believe that the company is asking too much in order to pad profits, or what not.

if the overwhelming market believes the price is too high for the value, the company can either lower profits and price, to match, or not sell. This is no stranger to Apple as they have had to price adjust in the past when the market overall said they were asking too much. The original iPhone, the MacBook air's first version, etc. Or on the flip side, during the 90's Apple computers were seen as "excessively priced" and often far far more expensive than their PC Counterparts, leading to a consumer sentiment that Apple was not worth the value and even dubbing the "Apple Tax".

TLDR: your very premise is wrong, and every consumer should have the right to deem for themselves if a price is huge, greedy or excessive
[doublepost=1474985663][/doublepost]
AgentAnonymous said:
<citation conveniently missing>

If you think they didn't save money you're being naive.
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its not always about saving. Likely didn't save all that much by removing the headphone jack. But that wasn't the purpose. there were additional costs in the iphone7 that would have easily ate into any of those savings. Retooling alone would likely have cost more (they have to redo the assembly line machines that once created the opening for the headphone jack, and the machines to attach it to the board, etc). these are large scale manufacturing items and there are so many hidden costs with every change.

However, as I said, saving a few pennies wasn't the goal here. It was revenue generation on the end user. With no headphone jack, you can no longer use wired headphones that Apple cannot monetise on. those billions of headphones that have already been sold that Apple cannot profit from are no longer usable without paying apple.

you will end up buying adapters now, especially if you lose the one they ship (9.99 revenue per sale), they will also get revenue from every single lightning connected headphone by 3rd parties due to MFI licensing program. I also guarantee you that they'll license out the W1 chip for wireless headphones as well.

this is one of those cases where its really likely not a cost saving reason to remove the jack, but a way of forcing a new stream of revenues, which ultimately, has the same net result of a higher profit margin / value at the end of the year
 
LordVic said:
actually, yes we do. As the consumer, we are the very people who get to decide if we believe the price of admission to a product is too much for that product or not. NOT the company to tell us.

That is the very nature of market economics. The Market sets the value, NOT the enterprise. The enterprise can produce an offer to sale at a certain value and if the consumer believes it to meet their own required value, then either purchase, or if it doesn't meet their perceived value, Not purchase it.

that not purchase decision can be because one sees the asked price as too much for that product. the consumer then has everyright to believe that the company is asking too much in order to pad profits, or what not.

if the overwhelming market believes the price is too high for the value, the company can either lower profits and price, to match, or not sell. This is no stranger to Apple as they have had to price adjust in the past when the market overall said they were asking too much. The original iPhone, the MacBook air's first version, etc. Or on the flip side, during the 90's Apple computers were seen as "excessively priced" and often far far more expensive than their PC Counterparts, leading to a consumer sentiment that Apple was not worth the value and even dubbing the "Apple Tax".

TLDR: your very premise is wrong, and every consumer should have the right to deem for themselves if a price is huge, greedy or excessive
[doublepost=1474985663][/doublepost]

its not always about saving. Likely didn't save all that much by removing the headphone jack. But that wasn't the purpose. there were additional costs in the iphone7 that would have easily ate into any of those savings. Retooling alone would likely have cost more (they have to redo the assembly line machines that once created the opening for the headphone jack, and the machines to attach it to the board, etc). these are large scale manufacturing items and there are so many hidden costs with every change.

However, as I said, saving a few pennies wasn't the goal here. It was revenue generation on the end user. With no headphone jack, you can no longer use wired headphones that Apple cannot monetise on. those billions of headphones that have already been sold that Apple cannot profit from are no longer usable without paying apple.

you will end up buying adapters now, especially if you lose the one they ship (9.99 revenue per sale), they will also get revenue from every single lightning connected headphone by 3rd parties due to MFI licensing program. I also guarantee you that they'll license out the W1 chip for wireless headphones as well.

this is one of those cases where its really likely not a cost saving reason to remove the jack, but a way of forcing a new stream of revenues, which ultimately, has the same net result of a higher profit margin / value at the end of the year
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I guess we disagree.
Since the consumer has no idea of actual product cost , any guess is just that .
To then use that guess to decide what is huge, excessive etc. profit is not more than a faulty assumption.

Based on your viewpoint, obviously millions of people are fine with Apple's offered iPhone price points, otherwise they would not buy and repeat buy iPhones in the millions.

"The market" does not set the price for iPhones, as there are only alternatives Apple consumers may not like.
The competitors are smart enough to stay around they Apple iPhone prices. Why give away possible $$$ ?

In the coming years there will be more pressure on ALL smartphone companies to reduce pricing, BUT they all circumvent that by adding new features and keeping the original price points of the previous.

Everybody kwetching about any price of any product should do 2 things:

1) ask themselves what they would do if they had the opportunity to charge whatever is possible
2) not buy when value to price ratio are not met.

The last one requires some discipline. For example: To pay double or triple prices for "designer" fashion which are made in the same factories for Sams Club, Walmart etc. is just a waste of money.
But then if it's important to somebody it creates that value to price ratio they want.
 
Thunderhawks said:
Since the consumer has no idea of actual product cost , any guess is just that .
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the actual cost to the manufacturer is overall irrelevant to the end user. There have been many places where products have had to sell below costs because the market would not bear higher prices. For example, the xBox 360 and PS4 both for the first few years of manufacture sold at losses because the market would not bear or pay higher than they were already selling at. The end consumer doesn't care as long as there's promise of support, and reasons to use the platform.


Thunderhawks said:
Based on your viewpoint, obviously millions of people are fine with Apple's offered iPhone price points, otherwise they would not buy and repeat buy iPhones in the millions.
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Absolutely. The one thing I might not have gotten accross well in my ppost is that this isn't some generic statement that if I say it's overpriced, that means it's overpriced for everyone. It's a personal thing that will always depend on personal circumstances.

to me, the iPhone is overpriced. in Canada it would cost me $1015 (with tax) to get the base iPhone. That is for me, overpriced. I don't make enough in my everyday job to drop $1,000 on a whim for a phone. That doesn't mean in the US where it's $650 that would be true (and if the iPhone 7 cost only $650, i'd consider buying one now, though.. headphone port.blahblahblah)

The problem though becomes if too many people start thinking the same. either Apple adjust their prices and take less margin, lower costs to maintain margins, or willingly accepts customers leaving for cheaper alternatives. At the end of the day, it's still the consumer who holds the power.

Thunderhawks said:
In the coming years there will be more pressure on ALL smartphone companies to reduce pricing, BUT they all circumvent that by adding new features and keeping the original price points of the previous.
Click to expand...

yes. Thats the nature of the market and has been true for years. As products enter maturity, differentiating factors decrease, cost of manufacturing decrease due to economies of scale, and feature parity becomes more standard, thsoe who wish to command premium prices for their devices need to differentiate themselves in someway. Usually by throwing new features in. But for those who cannot do such differentiation, the biggest competing factor will become price and most parity products will drop in price to remain competitive. Again, the power is in the Consumer hands, as they are will be ultimately the ones who spend the money
 
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