iPhone SE Component Costs Estimated to Start at $160

[warrior2000]

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.

There is a basic reason for the storage prices:

The 64/128 buyers are subsidizing the 16GB buyers.

What would happen if Apple applied the same profit margins on all phones? What would the prices look like? Is that what you want? We all know the additional memory only cost about $20 more. So if Apple got the same profit margin on all models the prices would look like this:

16GB iPhone $750
64GB iPhone $790
128GB iPhone $810

Is that what you want to see?

If you don't charge a premium on the 64/128 tiers then you would have to charge MUCH more for the 16GB phones. And how will people who only need 16GB phones feel?
[doublepost=1459792957][/doublepost]

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.

Component costs are useless.
Especially when these articles have ZERO idea how much Apple is paying for these components.

Component costs are as useless as doing an analysis of how expensive a piece of steak cost vs how much you pay for a steak dinner in a 4 star restaurant. Raw material means jackshet, especially since iOS and ecosystem is a HUGE reason why people buy iPhones.

Its pretty obvious what these articles are trying to do: Show that Apple is ripping off customers.

If not why don't we see these same type of articles about Samsung phones? Or other Android phones? Or why don't we see component costs articles on cars? Or what about component costs on Microsoft Office software? We don't because its useless information. We don't because the media does not have a reason to target those companies like Apple with negative propaganda.

 

[macfacts]

...

Component costs never tell the true story.

You're saying that like Apple's profit margins are not huge.

 

[warrior2000]

You're saying that like Apple's profit margins are not huge.

Apple's profit margin is 21%

Which is lower than both Google and Microsoft.

 

[GFLPraxis]

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

Component costs never tell the true story.

Windows 10's component cost is near zero; just transfer bandwidth. Microsoft is ripping off OEMs and retail buyers.

 

[yellowscreen]

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

Component costs never tell the true story.

what about the bottle?

i'm surprised nobody yet called you out for that. no wonder sanders has supporters, many people are so out of touch with basic economy. democracy wont work that way, but hey at least we have a republic.

 

[warrior2000]

What is the component cost for Microsoft Office?
What is the component cost for Google advertising?
What is the component cost for a steak at a 4 star Steak house?
What is the component cost of a car?
What is the component cost of a Cake?
What is the component cost of a can of Soda?
What is the component cost of prescription drugs?
What is the component cost of diamonds?
What is the component cost of a Starbucks cup of coffee?
What is the component cost of a Bluray Disc?
What is the component cost of a digital book?

Why don't we see DOZENS of article of these component costs yet we see dozens of articles every time a new Apple product comes out?

Why?

Because the media wants outrage and wants people to think Apple is ripping off its customers.

 

[MH01]

These estimated costs articles are great guaranteed click bait. Amazingly to this date we still fall for it and debate the same dead horse ....

 

[macfacts]

...

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

Take total r&d spending per year and divide by total iphones sold. Not hard to calculate. In the link I provide it says r&d is 3% of all sales in 2015. So 3% of a $650 iPhone is about $20.

Source: http://iphone.appleinsider.com/arti...ch-and-development-swells-again-to-19-billion

 

[MH01]

What is the component cost for Microsoft Office?
What is the component cost for Google advertising?
What is the component cost for a steak at a 4 star Steak house?
What is the component cost of a car?
What is the component cost of a Cake?
What is the component cost of a can of Soda?
What is the component cost of prescription drugs?
What is the component cost of diamonds?
What is the component cost of a Starbucks cup of coffee?
What is the component cost of a Bluray Disc?
What is the component cost of a digital book?

Why don't we see DOZENS of article of these component costs yet we see dozens of articles every time a new Apple product comes out?

Why?

Because the media wants outrage and wants people to think Apple is ripping off its customers.

Speaking of raging ..... article has worked !

 

[iMember]

5$ off from $160, IHS forgot about polished chamfered edge, wich means the SE will cost around $155

 

[dwaltwhit]

And of course telecoms get their cut too. You think verizon is selling these things wholesale? Im impressed that even if this figure of $160 is close, that the brand and value added lets them get 50-60% margins. I used to sell tv's at a certain store and we were often selling $1,000, $1,500 tvs anywhere from $50 above wholesale to $100 BELOW. Good for Apple.

 

[ksnell]

R&D, G&A, etc.

 

[Mac 128]

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.

What are you talking about? At $399 with a component and manufacturing cost of $160, they're making almost 40% on a phone that had minimal R&D costs, and as far as I can tell, no advertising costs.

In fact this is AMAZING news as it means what I suspect will happen is more likely to now:

In 12 months when I believe Apple will release a premium 4" 7 phone for $599, the SE as is, can drop to $299 thus making it even more affordable, and maintaining the $250 differential with the 6s with which it will be depreciated alongside. Then when the 6s drops down the the $449 traditional "entry price", there's still room for the SE to drop to $199 and still make a profit, not to mention some of the parts will cost even less then ... and now we're talking iPod Touch replacement territory. If Apple can sell an iPhone for the same price as the iPod Touch, then there's no reason to keep the Touch around.

Meanwhile the "7 mini" or whatever it will be called, will depreciate with the 7 keeping a more profitable premium offering in the 4" lineup, until it too drops low enough to replace the SE.

That of course all depends on how well the SE sells. If the demand for a 4" phone doesn't materialize, then Apple could shelve its plans for annual updates. The problem is, they can't continue selling the old 5s case indefinitely. At some point they will need to update the entire hardware, and Apple doesn't do that without charging a premium, nor should they considering the R&D that goes into a new design. Which is why, no matter how well the SE does, unless Apple decides to discontinue the 4" phone altogether, they will most likely release a new 4" phone early enough in the 7 life cycle to earn back the launch costs. And one motivating reason to keep the 4" around is not only lower cost, but crossover with the dwindling iPod market, which could be discontinued entirely in two years once the A8 has outlived its usefulness.

 

[cfedu]

At some point they will need to update the entire hardware, and Apple doesn't do that without charging a premium, nor should they considering the R&D that goes into a new design

IPhone 5c had a new case design and was the cheapest new iPhone ever at release.

Apple charges what Apples can charge, plain and simple.

 

[kdarling]

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.

Nor is it as if Apple is the only company on the planet to mass produce items in the past century.

Such analysis is not rocket science. There's plenty of data over the decades to know what components in quantity cost.

Also the price of any product goes beyond what the individual components add up to.

Sure, but these estimates are NOT about the total cost. If they were, THEN people could complain.

That said, Apple reports its overall profit margins, so it's not hard to estimate what their actual cost is.

 

[ric99]

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.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

[doublepost=1459798854][/doublepost]Tim Cook is a liar and a crook!

 

[LovingTeddy]

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.

So there are no "hardware, software, do the R&D, quality control, supply chain, pay for acquisitions to buy technology to build better products" costs with Android manufactures? Do they just magically poop out phones that are selling for 300 dollars?

Or you think Android phone only worth that much and iPhone is automatically worth more?

There is virtually no R&D with iPhone SE, all just recycled from older components or extra stuff laid around. iPhone is not selling as well as used to, so Apple just come up with new phone to use excessive inventory. That is it. iPhone SE only worth 300 max, 400 dollars? That is money grab.

Samsung sepnd tons of money on R&D, Samsungs came up more stuff than Apple even dreams of. So when Samsung charges, it is not fair?

 

[skinned66]

16GB iPhone $750
64GB iPhone $790
128GB iPhone $810

Is that what you want to see?

I'd love to see that. But full disclosure: I don't like remoras either.

If 16GB is so awesome let them pay full pop for it.

 

[applezulu]

[doublepost=1459798854][/doublepost]Tim Cook is a liar and a crook!

It's so nice of you to sign up just for the purpose of libel.

 

[warrior2000]

So there are no "hardware, software, do the R&D, quality control, supply chain, pay for acquisitions to buy technology to build better products" costs with Android manufactures? Do they just magically poop out phones that are selling for 300 dollars?

Or you think Android phone only worth that much and iPhone is automatically worth more?

There is virtually no R&D with iPhone SE, all just recycled from older components or extra stuff laid around. iPhone is not selling as well as used to, so Apple just come up with new phone to use excessive inventory. That is it. iPhone SE only worth 300 max, 400 dollars? That is money grab.

Samsung sepnd tons of money on R&D, Samsungs came up more stuff than Apple even dreams of. So when Samsung charges, it is not fair?

Look at reality. All those Android phone makers are going bankrupt or make very little profit at all. Even Samsung has its profits drop 80% the last couple of years.

Apple makes about 90% of smartphone profits while only selling 15% of the phones. That alone should tell you those Android makers will be bankrupt, just a matter of time. Samsung would be bankrupt also, but they have many other businesses keeping the company afloat and get big discounts on the screens/chips they make in house.

And if a company is inches away from bankruptcy you think they have money to spend on R&D? Hire and keep the best talent? Offer great customer service? Of course not. When a company is on the verge of bankruptcy they cut corners and the customer loses out.

You also fail to account for the costs of creating and maintaining iOS. No Android manufacter has to pay BILLIONS to keep Android up to date and adding new features. That is a massive expense.

And please name me all these amazing stuff Samsung made up?

Multi-touch Apple made - Samsung copied
Physical design of iPhone - Samsung copied
TouchID - Samsung copied
ApplePay - Samsung copied
Home button - Samsung copied
Retina screen - Samsung copied

Hell Samsung does not even have its own operating system running on its premium phones.


[doublepost=1459801461][/doublepost]

I'd love to see that. But full disclosure: I don't like remoras either.

If 16GB is so awesome let them pay full pop for it.

So you would love for the 16GB model to start at $750?

That's crazy talk. Tell that to the tens of millions of people who buy $650 iPhones each year.

 

[Sevanw]

To anyone supporting Apple and their overpriced products (including the new recycle bin SE) under the umbrella of a company's right to make a profit, need not complain about the price of any other product or service. This includes your phone bill, cable bill, price of gas, price of groceries, and all other utilities. If you do complain of these other prices, and don't apply the same understanding of "a company making a profit," then you my friend are a blind loyalist, rather than just a loyalist. Nothing wrong with the latter.

 

[Mac 128]

5$ off from $160, IHS forgot about polished chamfered edge, wich means the SE will cost around $155

Never cared for the polished chamfered edge. It looks out of place against my space gray 5s. Probably the silver or gold are the only two it did look right with, and since it was the first to offer gold, probably all they were looking at.

IPhone 5c had a new case design and was the cheapest new iPhone ever at release.

Apple charges what Apples can charge, plain and simple.

But it wasn't a NEW iPhone. It was the exact same iPhone 5 internals inside a much cheaper to produce plastic case. Re-read what I wrote, and get back to me when Apple releases a brand new design -- that's case and internal components.

All you've done is highlighted another iPhone precedent in which Apple created a new cheaper plastic case to house previously existing guts, in which they charged the mid-tier price of $549 -- the same price they would have normally charged had the iPhone 5 dropped down $100 unaltered when the 5s was introduced, just like the 4 & 4s before it. And despite the additional R&D to develop that new case, much of which was probably worked out during the 5 development, the cost was likely more than offset by the reduced manufacturing expenses, netting Apple a wider margin than they would have made had they just kept making the iPhone 5 as it was.

The SE sets an even more impressive precedent, one in which the housing was essentially unchanged but a large part of the internal hardware was changed, and sold it for less than the cost of the sum of its parts, though in all fairness they had already depreciated the 5s to the $449 tier, and by September might have been able to drop it to $349 if they kept it around. So again, Apple makes more money even with the R&D costs than they would have made had they left the 5s unchanged -- not to mention adding additional potential revenue streams like Pay to further offset the cost.

I think this also suggests that creating a new shell may cost more than merely updating a PCB though it's hard to say since the 5s was already at the bottom tier to begin with and the 5 was just dropping into second place.

But neither of these phones are complete hardware redesigns from the ground up. And that's the point. So my original statement stands: to date, Apple has never introduced a completely redesigned iPhone without charging a top-tier premium price to help recoup the substantial costs involved in such an undertaking, regardless of the individual component costs themselves.

 

[billy the fish]

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.

Lol, is this a joke. The s6/s7 edge devices are pieces of beauty, there's nothing like them on the market. The s7 is a runaway cert for handset of the year. And all this from a firm that only does Half the. Work of apple who have just released a phone with a 3yr old design and last year's internals. Do you honestly believe this garbage.

 

[Fancuku]

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

Because Apple apologists don't like facts.

 

[smacrumon]

The Apple iPhone could be a loss leader to draw in more customers and instead profit from apps and the rest of its eco system.