iPhone SE Component Costs Estimated to Start at $160

[MacRumors]

Component costs for the new 16GB iPhone SE are estimated to be at about $160, according to a preliminary teardown report from IHS iSuppli. When a new iPhone is released, IHS often takes it apart to estimate the cost of each component to ultimately predict how much Apple spends on hardware.

IHS estimates that the materials for the device cost $156.20, rounded up to $160 with the addition of manufacturing costs. Apple is believed to have kept the base cost of the iPhone SE relatively low by using a number of parts designed for the iPhone 5s, 6, and 6s, allowing the device to be sold to consumers at a $399 starting price due to price drops on the original components.

For example, the Gorilla Glass display in the iPhone SE is estimated to be one of the most expensive components, coming in at a price of $20. When that display was originally used in the iPhone 5s, it was more than twice as expensive. When the iPhone 5s was released in 2013, in fact, its costs were estimated to be at $199 and with Apple's most recent flagship iPhone 6s Plus, component costs were estimated to start at $236.

When it comes to the 64GB iPhone SE, IHS estimates that Apple is making an additional $89 per device over the 16GB iPhone SE, due to the relatively low cost of memory upgrades.

"Apple is willing to drop its gross margin on the low end to induce sales -- though it is likely counting on many consumers upgrading to the more profitable 64 gigabyte SE model," said Wayne Lam, principal analyst, mobile devices and networks, IHS Technology. "When the profit machine that is Apple capitulates to the market forces of a maturing industry, it shows its tacit acknowledgement that even it is not immune to the dynamics of the global smartphone slowdown."

IHS' component cost estimates look at the potential price related to each individual component in a device without taking into account other expenses related to product creation like research and development, advertising, software, and distribution, so while interesting, the estimates are not a useful tool for determining Apple's actual profit margin. An earlier report from CNN suggested the iPhone SE components have a total cost of $220, but IHS has a longer history and more experience with component pricing estimates.

In the past, Apple CEO Tim Cook said that component cost breakdowns on Apple products are inaccurate. "There are cost breakdowns around our products that are much different than the reality," he said. "I've never seen one that is anywhere close to being accurate."

Article Link: iPhone SE Component Costs Estimated to Start at $160

 

[bbeagle]

Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.

 

[2457282]

Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.

Agreed. The cost of the OS and software need to be include. Plus shipping. Plus advertising. And then you have Jony's big bonus to think about

 

[lordofthereef]

In line with their other products.

 

[Michael Goff]

I love how we give these guesses the time of day ...

 

[dannyyankou]

When people complain about component costs compared to the actual product, it reminds me of on Pawn Stars when they bring in an expert to say what something's worth, then they offer half of that. Like people expect them to buy and sell stuff without making a profit.

 

[applesith]

Evil Apple making too much money </sarcasm>

 

[metsjetsfan]

V

Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.

very true but this time it maybe slightly closer to the truth since there was little time spent on outer design/case. But I agree still miles away

 

[Oblivious.Robot]

And then you have Jony's big bonus to think about

Oddly, that's the one thing he won't like to be thinner!

 

[MrGuder]

Should we all return it because Apple makes a profit? Unless you are using an SE you won't realize how great this product is...it one fast beast and it finally packs a battery to last more than a day and then some. It does everything it claims to be and is a great value price wise just wish it came with 128gb.

 

[Rogifan]

Another meaningless component estimate analysts that Tim Cook has said is meaningless. How in the world would any of these firms know what component costs are for Apple? It's not like Apple is just buying stuff off the shelf at market price. Also the price of any product goes beyond what the individual components add up to.

 

[d5aqoëp]

Hey it's that day again.

 

[CFreymarc]

Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.

Yes, there is always labor to build each unit. There there is overhead cost such as amortization of R&D, Marketing, Sales staff, support, service and other pay.
[doublepost=1459790072][/doublepost]

Another meaningless component estimate analysts that Tim Cook has said is meaningless. How in the world would any of these firms know what component costs are for Apple? It's not like Apple is just buying stuff off the shelf at market price. Also the price of any product goes beyond what the individual components add up to.

True. When you start building millions of units, you get massive volume discounts from all suppliers.

 

[jayisblessed]

Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.

Yeah! I'm with you. One will be very surprised how little he/she is worth when based on the price for the weight of his/her flesh and bones

I think the R&D and other massive operation cost is much more expensive.
[doublepost=1459790479][/doublepost]

In line with their other products.

Okay, guys, I offer 250USD. Can anyone build a genuine iPhone SE for me? No?! OK, 300USD? Still nooo?! Well, then it proves this article is just a piece of useless garbage.

 

[brewmonkey]

In the past, Apple CEO Tim Cook said that component cost breakdowns on Apple products are inaccurate..."I've never seen one that is anywhere close to being accurate."

Probably a little bit of grandstanding with that statement. Of course we can't know exact details of Apple's contracts, but supply chain analysis is neither new nor rocket science. They're not posting the highest profitability of any company on earth on grocery store margins.

 

[Bubba Satori]

Why are so many people upset when these estimates come out?

 

[Avieshek]

They shl'd focus on their Apps like iWork

 

[dannyyankou]

Another meaningless component estimate analysts that Tim Cook has said is meaningless. How in the world would any of these firms know what component costs are for Apple? It's not like Apple is just buying stuff off the shelf at market price. Also the price of any product goes beyond what the individual components add up to.

Even if the estimate is accurate, who cares? Let Apple charge what they want. If people don't like it, don't buy it. Let the free market play out.

 

[phpmaven]

Well, of course the sales are "lackluster", most people don't want a dinky phone anymore. Some people do, so they will buy it, but most people are happy with a larger phone.

 

[mountain]

"Many" i don't think there are many but phones are expensive piece of device though.

 

[modemthug]

Apple has to employ all of the people that build the hardware, software, do the R&D, quality control, supply chain, pay for acquisitions to buy technology to build better products. Also Apple provides excellent support.

Apple hardware is not just off-the-shelf components. It would be like going to a Lexus dealership and offering only the price of the metal, rubber, plastic, wood and leather to build the car.

People should be outraged that Samsung charges the same prices, but does less than half the work and puts out a product of poor quality. At least Android companies like OnePlus and now Moto have the decency to charge a fair price.

 

[macduke]

I'm really surprised that they started it at $399. That lowers their margins quite a bit. I thought it would be $549 at the lowest. However, I don't think they're going to update this product every year. It will be more like the iPod Touch, every couple years or so, and therefore the margins will improve over time as the price comes down on the older components.

 

[warrior2000]

"I haven't seen [them for Apple Watch], but generally there are cost breakdowns around our products that are much different than the reality. I've never seen one that is anywhere close to being accurate," Cook said.

https://www.macrumors.com/2015/04/27/apple-product-component-cost-breakdowns-inaccurate/
[doublepost=1459792235][/doublepost]

Probably a little bit of grandstanding with that statement. Of course we can't know exact details of Apple's contracts, but supply chain analysis is neither new nor rocket science. They're not posting the highest profitability of any company on earth on grocery store margins.

Apple's profit margins the last 3 years is about 21%

Microsoft's profit margins in 2011 was 35%
Google was also at 26% in 2014

Apple's profit margin is actually low compared to other big tech companies.

 

[JonneyGee]

It sounds like the SE is pretty well in line with their expected price point and profit margins. It's great that they've been able to keep quality components in the areas that matter most while also keeping the overall cost down.

My one issue is that same as it is with all of Apple's iOS devices. The storage upgrade prices are pretty ridiculous. The cost difference between 16, 32, and 64 GB chips is pretty minimal. IMO, they should offer 32, 64, and 128 GB options with a $50 difference between each. $100 to go from 16 to 64 GB, an upgrade that costs Apple little more than $10, is way too much in 2016. It made sense at first but not anymore.

 

[lordofthereef]

Okay, guys, I offer 250USD. Can anyone build a genuine iPhone SE for me? No?! OK, 300USD? Still nooo?! Well, then it proves this article is just a piece of useless garbage.

not sure why I was quoted here...
I was making a statement that it's in line with their other products, not a judgment.

Fwiw it's useful to talk about component costs for more reasons than the simple "omg they costthis much and they charge me more than double?!!!!" Argument.

Understanding total component cost when looking at repair and replacement csn be valuable.

Research and development are,always going to be variable depending on the company and product. Comonent costs are actually something we can fairly easily estimate though. I see nothing wrong with having this discussion. The article doesn't even attempt to discuss apple's actual profit. For whatever reason whenever we have an article in component costs though, forum members immediately jump to that.