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iPhone 8 Component Costs Estimated to Start at $247.51

They are planning sales of 50 million units of the iPhone X. So for every $50m spent on R&D, that's $1 per unit. Figuring it took them 3 years to design, plus purchased a company for the face detection.... just how much did they spend on R&D? You can honestly buy an iPhone and use it for 5 years, so $200/yr for a phone that just works... I'll take it! My daughter is still using a 5s, with iOS 11.
 
macbeta said:
Always interesting that 7$ to 10$ on their end equals 200$ - 250$ on the consumer end.
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You can always buy a Xiaomi. It’s not like Apple is the only one making phones.
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rafark said:
I get they very well deserve their profit but $500 is excessive and downright an insult to the customers, maxime considering they produce in mass (read: millions) and as a consequence prices should decrease and not increase.
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By that’s logic, Nike should be selling T-shirts for pennies, yet they don’t.

Funny nobody is doing the same cost breakdown for apparel items or food products.
 
MacRumors said:



The iPhone 8 and iPhone 8 Plus are more expensive for Apple to manufacture than the iPhone 7 and iPhone 7 Plus, according to component cost estimates research firm IHS Markit shared today with Bloomberg.

An entry-level iPhone 8 with 64GB of storage costs Apple an estimated $247.51 in raw materials, an increase of almost $10 compared to the $237.94 it cost Apple to make last year's 32GB iPhone 7.

The 64GB iPhone 8 Plus costs an estimated $288.08, up from $270.88 for the iPhone 7 Plus.

ifixit-teardown-iphone-8.jpg

Image from iFixit's recent iPhone 8 teardown​
To compensate for the increased cost, Apple charges $699 for the 64GB iPhone 8 in the United States, up from the $649 starting price it charged for the 32GB iPhone 7 in 2016. The iPhone 8 Plus is priced starting at $799, up from $769 in 2016.According to Bloomberg, some of the most expensive components in the iPhone 8 and 8 Plus include the screens and the mechanical enclosures. Apple's new glass-bodied devices are built around a strong internal frame and include new displays with True Tone support.

Compared to iPhone 7 pricing, the wireless charging module increases costs by $2, the A11 Bionic chip costs $5 more, and the larger 256GB storage options increase prices by $6.

IHS's component costs are only estimates of what the iPhone 8 and the iPhone 8 Plus cost to manufacture, and sometimes those estimates are not spot on. For example, while IHS told Bloomberg cost $237.94 to manufacture an iPhone 7 in 2016, its initial estimates following the iPhone 7's release were at $219.80.

These estimates also only look at raw component costs and do not take into account other iPhone manufacturing expenses like research and development, software creation, advertising, and distribution, so this information, while interesting, is not an accurate measurement of Apple's profit margin for the iPhone 8 and the iPhone 8 Plus.

Back in 2015, Apple CEO Tim Cook said that cost breakdowns are generally "much different than the reality." "I've never seen one that is anywhere close to being accurate," he added.

Article Link: iPhone 8 Component Costs Estimated to Start at $247.51
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Hmmm, they had paid for R&D last year and got by just fine, not like they made so many changes to a phone that looks the same as 4 years ago.

After all, you don’t have $260 Billion In the bank if you truly are using a lot of the revenue for R&D.

But hey, if you guys don’t want to realize the price gouging that’s going on, then Apple is all the more happy.

You’d think with that kind of extra money, we could get a version of iOS that doesn’t make a 7+ choke on animations 30% of the time.
 
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Allegedly. How much were the machines Apple had to pay for to assemble the phones? How much was the R&D associated with the phone? Now factor in returns and exchanges and the training costs for the employees.
 
flat five said:
huh? a huge chunk of the phone's cost goes towards labor/construction..

a very general estimate when building something is:
1/3 materials
1/3 labor
1/3 admin & profit (profit generally being around 20%)

do that with this bill of materials of $247 and you come up with $741... Apple is selling it at $699..
(or $864 on the plus with Apple selling at $849)

is the cost high to the buyer? sure..
but Apple isn't overcharging here.. at least, not if comparing to how anybody else is running a profitable business.

----
you really think Apple is profiting $500 per phone?
maybe more like $150

and with a slick production / organized supply chain.. they may be able to pocket some more cash per phone.. but not because of greed so much.. more because they're smart builders.
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Read my post again... until the end. I was being sarcastic, I'm aware that the phone realistically costs more to make than the material cost.
 
Robstevo said:
LMAO r and d for what?

Pretty much same screen, wireless charging that has been out for years, same enclosure for 4 years bar glass...please stop
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True tone display that needs testing. Wireless charging that needs testing. We don't want them not testing charging and getting, ehm, explosive results. Etc. Something tells me you don't know what you're talking about. Pls stahp
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macbeta said:
Always interesting that 7$ to 10$ on their end equals 200$ - 250$ on the consumer end.
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Um, it cost Apple (supposedly) $247.51. 247.51/10 = 24.75. 24.75 * 200 = 4,950. That's $4000 more than what an iPhone costs.

Stay woke Macrummors. There's hyperbole everywhere here. It's all a joke.
 
garirry said:
Read my post again... until the end. I was being sarcastic, I'm aware that the phone realistically costs more to make than the material cost.
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oh.. my bad.. i misinterpreted:

yes I know most of the revenue goes to R&D it's a joke
​
upon your secondary explanation, i now see what you meant the first time around ;)
srry
 
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deany said:
$699.00 cost of iPhone 8

$279.60 Gross Profit @ 40% approx

$171.89 R&D advertising etc

$247.51 Raw materials
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Next time you are in a Jewelry store, just ask yourself how they can make money offing those huge discounts. Apples profit margins a slim compared to that lot. Markups of 200-1000% and more are common.
 
The worst thing about this is the memory cost....the fact that 64GB to 256GB increases cost by only $6, yet the price bump for that is now $150...that's a racket. The rest is a quite healthy profit margin after R&D and other costs, but still largely within reason.
 
rafark said:
I get they very well deserve their profit but $500 is excessive and downright an insult to the customers, maxime considering they produce in mass (read: millions) and as a consequence prices should decrease and not increase.

And I know there are other associated costs but they're nowhere near half $500.
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Please tell us what the cost of developing a new processor is
Hell 1/2 the costs is working out the testing procedure for the chip to ensure its working, they use a LOT of hardware "tricks" to test a billion transistors.
Then there is the issue of testing the phone for interference etc, that chamber did not come for free
Oh, and each model, yeah the assembly line needs to be changed every time time they change
And any changes they make, all have to be re certified again.
 
HardRain said:
There is also the ever dropping cost of innovation. Since everything now is minor improvements the overall cost of research and development is dropping. Then there is the 4 year old design. The cost of this device should have dropped.
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Dude are you paying any attention. The A11 is leaps and bounds better than anything around. You think beating intel’s year over performance gains while nearly matching their overall performance using a fraction of the wattage and heat dissipation is cheap?
 
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The other cost that most forget is the fact that Apple pays significant royalties on patented processes / parts used in every iphone.
 
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sir1963nz said:
Please tell us what the cost of developing a new processor is
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i'd guess about $100million..
about $1 per phone.

total R&D cost per phone is maybe around $20..
(about $2billion total)

that is a huge chunk of money, no doubt.
however, there are far greater chunks of money Apple needs to spend in order to get that operational iPhone in your hands ;)

(for simple example.. if they spent $100million developing the A11, it's going to cost much more than that to have 100 million of the newly developed chips built ; ) )
 
rafark said:
I get they very well deserve their profit but $500 is excessive and downright an insult to the customers, maxime considering they produce in mass (read: millions) and as a consequence prices should decrease and not increase.

And I know there are other associated costs but they're nowhere near half $500.
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What would you define as “not excessive” and “not an insult”?
 
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