Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
iPhone 8 Component Costs Estimated to Start at $247.51
- Thread starter MacRumors
- Start date
- Sort by reaction score
they spend a crap load of money on R&D.. more than just about every other company out there.. however, they sell such a high volume that yes, the R&D costs alone aren't entirely relevant..
if they only sold, say, half the amount of phones then the R&D costs would be more relevant.. and they'd need to sell iPhone8 at maybe $100 more.. (and still not walk away with nearly as much money as they do with their true volume)
(* let's call it a semi-educated guess there.. with focus on the 'semi' part
)
Nice strawman argument. No one is asking for those items to not be paid for. The part people have a problem with is the profit part (I believe from their financial statements it is around 40 to 50%).
And almost no one can defend the premium price increase for more storage. Packaging, shipping, retail store costs are the same for 32gb devices and 256gb devices.
Apple spent $10B on R&D last year. They've spent about ~$5.7B in the first half of this year.
[doublepost=1506398327][/doublepost]
Apple has a ~40% margin without considering any R&D. Once you factor in all those other expenses, they are at about 28-30%.
[doublepost=1506398327][/doublepost]
Apple has a ~40% margin without considering any R&D. Once you factor in all those other expenses, they are at about 28-30%.
And yet, it still costs money to ship all the parts and packaging to that factory, store them until they are ready to be assembled, pay for all the operating costs to design and run the facility where they are assembled, pay for people to assemble them, and then pay for people to put software on the phone and test the phone. Then it needs to be put into the packaging ready to ship to you.
None of those things are free.
no way.. not even close to that.
1/2 that at best.
yeah, that's around what i was guessing in my post a few up.. with a fifth of that going strictly towards iPhone alone.
They are shipping in bulk not one at a time. And I’m sure Apple is getting different shipping rates than grandma sending a fruitcake international.
Plus how many other manufacturers have phones being assembled at the Foxconn plant. Apple isn’t the only customer paying to keep the lights on.
Any yet, it's still not free. Nor does it make up the remainder of the cost of the phone. Like I said, there is R&D, Software, Packaging, Shipping, Advertising, and Retail Store costs. As well as the cost of things like legal teams and support staff to cover the standard warranty, as well as building, operating and maintaining facilities to run servers for the free iCloud service and app store that is included in the upfront cost of your phone.
The cost of the components might be $247, but the components alone are not an iPhone.
Actually Apple spends relatively little on R&D....in the region of 2% of revenue (still a huge number) but it is a myth that it is what makes an iPhone expensive.
Yes. They can afford it because they're a business, not a charity, so those costs are included in the cost of the phone on top of the $247 cost of components.
You mean they are a publicly held company. It’s only about shareholder profits. They could cut the costs in half and still sell enough units to have a huge market cap.
Yes I agree, but I was estimating that attributed to phones which I punted at being around half of their spend.
Last edited:
So, a publicly held company is not a business? And it therefore only cares about shareholder profits? And your argument is that Apple shouldn't be making profits.
OK. I'm sure that your future non-profitable business ventures will surely be a great success. Good luck to you.
Thing is, speaking strictly about the iPhone 8, it's a 4 year old design that doesn't really require that much in R and D unlike the iPhone X for which the costs of developing that cut screen (very hard, in all honesty) and the front camera sensors and software are quite expensive to develop.
Even then all of that is pointless once we get to one of the most important factors that end up being crucial in the pricing of a product: volume. The higher the volume, the less the development and production price.
If apple were selling only thousands or even several millions of phones per month then the price associated with developing the phone from manufacturing to r and d would need to be higher. But they don't sell dozens of millions, they sell hundreds of millions per year, this allows to lower the prices significantly, maxime considering they reuse many components across different products. For example, the processor, cameras and screen may be reused in two to three models of iPhone, the iPads and even the macs.
Need a billion to invest in the new processor? If they were to sell 150 millions of devices in one year from the models I mentioned in the last paragraph, they'd only need to add $10 to the manufacturing costs. That's what high volume does, and that applies to the manufacturing of the physical components as well.
Take the original iPhone, for example. That must have been VERY expensive to develop and produce as pretty much everything was brand new, despite they challenges they managed to price it at $500, and they weren't even selling a fraction of today's iPhones. They were selling comparatively low volume in a brand new market. Now they sell hundreds of millions in a well established market and the prices just happen to increase over time. That makes no sense.
The reality is, apple is now in a position were they can charge whatever they please, but just because they can doesn't mean they should.
Of course everyone at the end of the day is free to choose what they buy.
Last edited:
Average cost of an egg is roughly $.40? Some change for cheese and chopped ham.
So a 2 egg omelet should cost less than $2?
That’s not how it works
So a 2 egg omelet should cost less than $2?
That’s not how it works
They want to target different price segments so they can maximise profits.
They could build all models with 256 GB (perhaps the do?) and disable it in software, but people may get upset. Tesla does this with their batteries. if you buy a 60 kWh battery, you can make it into 75 kWh battery using a software update.
Last edited:
If you sell 140mio omletts a year, should not be a problem to hit $2. You get a big rebate on ingredients at that scale and the automated omlett packaging machine is a onetime cost.
The 64GB iPhone 8 referred to in the title of this thread sells for $699 and the parts cost $247.51 - that would make $1 on Apple's end equal $2.82 on the consumer end ($699 ÷ $247.51).
Common sense. IF profit would be 500USD selling 10 Million IPhones would net in 5 Billion profit. Does Apple earn that much on phones alone?
Not sure where the figure came from, but it is reputed that Foxconn earn about $6 a phone for assembly? This was "exposed" during their suicide scandal a few years ago.
I guess a lot of the assembly is automated, and perhaps only final finsihing and packing is labour intensive?