iPhone X Component Costs Estimated at $357.50

[DNichter]

I've seen a report saying Apple pays more than 100 dollars per display, it's more advanced than the ones samsung is using on their own smartphones.

And I'm pretty sure the manufacturing costs are far higher than 60 dollars. And then there is marketing and packaging and transportation costs which also go into the price.

And them we have R&D....
[doublepost=1510054550][/doublepost]
Again not that insane, they have other costs, iPhones don't appear all over the world in shiny new boxes and stores.

I get that, the markup is still higher than every other industry. Even when you factor in everything else. I have no issue with it as you get what you pay for.
[doublepost=1510061179][/doublepost]

Cry to your mom...this is the reality of business. Apple makes great margins, but so do a lot of companies...who sell, well nothing. At least nothing tangible.

Go take a look a margins for Microsoft, Facebook, Google, Visa, and Verizon.

Also, these types of analyses are not only wrong, but obviously aren’t a good measure of profitability. You’d fall out of your chair if you knew the component cost of your favorite car. A lot more goes into it, obviously.
[doublepost=1510017420][/doublepost]
Great analysis. The other factors like R&D are exactly the same. Did you go to an Ivy League?

You guys are nuts. I get that it's a business, that's why I said that. Cry to your mom?

 

[kdarling]

I noticed that America charges a tax on funds coming into the US that were already taxed in the country of origin.

Nope, you get a US credit for taxes paid to other countries. But you obviously have to first pay taxes somewhere to get any credit.

Instead, what Apple (and others) do is try to avoid paying most taxes in any country.

To do this, they created a sophisticated international system of shell companies that pass around supposedly valuable IP in order to claim massive tax deductions. It might have been legal to do, but it clearly intentionally circumvented the intent of tax laws.

That's why the EU is closing some loopholes and slapping on back taxes in the billions.

 

[Chupa Chupa]

Guys stop trying to explain economics to 4th graders.

If someone doesn't explain it to them they'll never learn. And then they'll end up adults with a kindergartener's understanding of economics. (I think 4th grade here is giving them too much credit. I think every astute 4th grader gets the concept of operating a lemonade stand or a bake sale).

 

[dilbert99]

Like the cost of the part is the only thing that goes into the phone. Upon repair. There are likely several things broken when a display is cracked.
[doublepost=1510055749][/doublepost]
Im sorry but its hard ro argue Apple execs are themselves greedy considering what theyve built up.

The rear of the phone is not a display and it is shocking that to replace that you have to replace half the phone.

 

[curtvaughan]

Why those people just don’t build a smart phone that cost $357.5 with all the features and quality and sell it at $400?
If they can do this, no one will buy iPhone from Apple.
It should be pretty easy as they always challenge Apple’s profit margin.

If someone or some company tried to do such a thing, they'd be sued by Apple for patent infringement or some such. In a generic sense, other companies are already making cheaper phones for less money - they're called Android phones, and most of the people buying them aren't buying iPhones from Apple.

 

[spacemnspiff]

I don't understand why they couldn't sell it for $359

That's a business idea for you, you could essentially take all those parts and assemble them and sell that phone in competition to iPhone for a huge profit, that's what most people in the thread are thinking. Let me know how that business idea works out for you, I might even invest in your company.

These part costs are meaningless unless you are in the business of selling just the parts and not the whole phone with the software and services, the whole experience. The NRE costs, software development and services don't factor into any of this.

 

[curtvaughan]

R&D. The 8+ didn't need much as it's based on the 7+, which was based on the 6s+, which was based on the 6+. The X is a major change by comparison.

In a sense, the 7 and 7+ were a major departure from the 6S and 6S+ , at least for quite a few people. Apple touted the new design as being courageous; others just noticed there was no longer a phone jack. Thus far (my current iPhone is a 6S+) the newer phones without the jack aren't attractive enough for me to buy at the prices demanded. If, by the time my 6S+ is no longer functional, the newer phones can provide the sound functionality I prefer - whether with improvement of wireless headphone technology and/or sufficient improvement to the phones themselves - I'll buy one. Otherwise, I won't. That is exactly how supply and demand is supposed to work.

 

[Rum_Becker]

Exactly. This is why I hate articles like this, because it creates mass hysteria among the public with no regard. Normal people are gonna read this and assume Apple is ripping them off of, based on this article alone. Funny how they fail to estimate the R&D of all the new aspects of the phone (display, camera, Face ID, etc), what it costs to warranty it and ship these things out across the world. Because you know, it was probably so cheap, it may as well be a rounding errrof

This is the exact reason I love Articles like this, it's funny to see the reaction of all the people with who have no comprehension skills or the people wearing tin hats on the other side claiming that this BOM is just pure BS.

 

[BruceEBonus]

Whew. It's R&D costs then that added the extra $1000 PER PHONE mark up.

That's ok then. Because Id've been quite narked otherwise had it all been attributed to marketing and profiteering and a cynical reliance on blind customer loyalty. Good.

Isn't it?

 

[skywalkerr69]

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

Yeah because we get them even cheaper!

 

[Cloudkicker]

A plastic bin/waste paper basket/mop bucket/recycling bin from Dollarama is just plastic. It can cost anywhere from $2 to $4. No idea how much the plastic beads require to melt to pour into a dyecast mould costs (say 55 to 80 cents), but once they got the mould set, there is no more R&D requirement. Just year after year cookie cutter.

So it's not like Apple has to start from scratch from an R&D standpoint from the very basic motherboard. They coast on everything that isn't a new feature.

 

[Chupa Chupa]

So it's not like Apple has to start from scratch from an R&D standpoint from the very basic motherboard. They coast on everything that isn't a new feature.

I'm no engineer but even I still understand that when you are building a system every new part can change the way unchanged parts react. Succeeding iPhone generations are not as cookie cutter as you suggest. Apple has to look at each new model as a new model regardless of what parts might be reused. New models may require less R&D but its certainly not de minimus. For Apple to coast it would have to literally release the same iPhone year after year. While the 6 is similar to the 7 and 7 similar to 8 they are different.

 

[Iconoclysm]

The estimate for the FaceID alone is $200+, and how many times do we have to read that this is a $130 display?
[doublepost=1510066035][/doublepost]

KGI may be telling you what the RETAIL price of the display would be, not what Apple pays for it.

Right, because these screens are available at retail...come on man.
[doublepost=1510066084][/doublepost]

A plastic bin/waste paper basket/mop bucket/recycling bin from Dollarama is just plastic. It can cost anywhere from $2 to $4. No idea how much the plastic beads require to melt to pour into a dyecast mould costs (say 55 to 80 cents), but once they got the mould set, there is no more R&D requirement. Just year after year cookie cutter.

So it's not like Apple has to start from scratch from an R&D standpoint from the very basic motherboard. They coast on everything that isn't a new feature.

Have you noticed the motherboard in this phone? Very basic? Why do people comment on these things this way without research?

 

[Baymowe335]

The rear of the phone is not a display and it is shocking that to replace that you have to replace half the phone.

Why is it shocking? Does the cell phone you invented have better fixability while also having the same functionality?

You kids have no experience with engineering tech, so you shouldn't comment on how "shocking" it is to do anything.

 

[drcre8tive]

Considering the costs of R&D, legal fees, patents, packaging, labor, salaries, golden parachutes, marketing/advertising, & shipping it's a wonder how they make any money at all.

 

[joonyaboy]

This is crazy - Apple used "secret bolthole" in Jersey to avoid taxes via Panorama paradise papers but expect us to pay even more?

You must be new to capitalism

 

[gtg465x]

I like how people will quote these estimates like gospel and will question the retail price. They seem to forget R&D, shipping of parts, final assembly and delivery to retail. These are all costs that need to be considered.

Yeah, component costs are just a small part of what it costs to make iPhones. Apple probably has 10,000 employees working on the iPhone alone, and if those employees (many of them engineers) have an average salary of $100,000, then Apple needs to use a BILLION dollars of iPhone revenue every year just to pay the employees who make iPhones possible. Not to mention the huge costs of manufacturing equipment, advertising, R&D, etc. Apple has a Gross Profit Margin of 37.91%, so on average, it costs them 62.09% of the sale price of their products just to break even. So the real cost, or break even cost for Apple, of an iPhone X is probably around $620.

 

[Rickjames74]

I like how people will quote these estimates like gospel and will question the retail price. They seem to forget R&D, shipping of parts, final assembly and delivery to retail. These are all costs that need to be considered.

Also they forget to take into account software dev, employees, stores, websites and advertising all of which are required for anyone to get an iPhone X.

 

[Bacillus]

Why is it shocking? Does the cell phone you invented have better fixability while also having the same functionality?
You kids have no experience with engineering tech, so you shouldn't comment on how "shocking" it is to do anything.

Maybe not exactly shocking, but about as disappointing as shameful how Apple spends fortunes on patenting new materials but not further developing them.
Any 3 year old kid can explain you that glass is the most shatter-prone material that is only useful for making windows or static objects but not phones. So you must be a lunatic or commercial genius to use it that way.
[doublepost=1510068874][/doublepost]

Exactly. This is why I hate articles like this, because it creates mass hysteria among the public with no regard. Normal people are gonna read this and assume Apple is ripping them off of, based on this article alone. Funny how they fail to estimate the R&D of all the new aspects of the phone (display, camera, Face ID, etc), what it costs to warranty it and ship these things out across the world. Because you know, it was probably so cheap, it may as well be a rounding errrof

You seem to ignore real estate costs, with the extremely expensive buildings and constructions that suit the execs' lifestyle and all their extravaganza, the huge Apple Music subsidies, self (non-)driving car development, etc. etc. and the fact that most of the billions remain piled up - unused.
Joe sixpack has never been asked and probably doesn't want to contribute to that - but doesn't have a clue.

 

[UK-MacAddict]

done what?
[doublepost=1510026747][/doublepost]

seems like a wild guess. i dont know much about hardware engineering, but miniaturing that bulky dot projector probably wasn't easy to fit inside jony's design of a phone. and then there's the software side of how to securely recognize a face and deter any spoofing attempts.

I assume miniaturising the tech was the main issue but the way the tech works itself was the same with the infrared dot projection etc.

The Xbox One Kinect was very accurate at tracking hand gestures for navigating the menus and could already recognise different users as I used to sign into my Xbox account using my face. You just stood or sat in front of the camera for a few seconds and it logged you in.

 

[Baymowe335]

Maybe not exactly shocking, but about as disappointing as shameful how Apple spends fortunes on patenting new materials but not further developing them.
Any 3 year old kid can explain you that glass is the most shetter-prone material that is only useful for making windows or static objects but not phones. So you must be a lunatic or commercial genius to use it that way.
[doublepost=1510068874][/doublepost]
You seem to ignore real estate costs, with the extremely expensive buildings and constructions that suit the execs' lifestyle and all their extravaganza, the huge Apple Music subsidies, self (non-)driving car development, etc. etc. and the fact that most of the billions remain piled up - unused.
Joe sixpack has never been asked and probably doesn't want to contribute to that - but doesn't have a clue.

All phones these days have glass screens. So a glass back is somehow shameful, egregious, and purposely designed to screw customers? It looks good, enables wireless charging, and just matches what's already on the front.

You literally have no idea what Apple is doing on patents.

 

[Michael Goff]

All operating costs should be considered when operating a business. Do you think Apple would have spent 5 billion dollars on a new head office or $80 million for a business jet if their margins were 5%.



What even your point, Your above quote does not reflect any economic reality, 120,000 people do not works for free, retailers sell things for a profit, Apple has to pay tax, and that Apple has to pay certain amount of royalties.



http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/net-margin-2513

The topic of discussion is how much it really costs to make an iPhone. Please try to stay on it.

 

[Morgenland]

It's basically a Microsoft Kinect miniaturised, so not much research needed.

LOL

 

[farewelwilliams]

I assume miniaturising the tech was the main issue but the way the tech works itself was the same with the infrared dot projection etc.

The Xbox One Kinect was very accurate at tracking hand gestures for navigating the menus and could already recognise different users as I used to sign into my Xbox account using my face. You just stood or sat in front of the camera for a few seconds and it logged you in.

i tried the kinect. the latency was god awful and completely ruined the experience. i'm sure there's some R&D spent on improving the latency, especially when it's running on a battery powered device vs plugged in kinect.

and i don't think Apple just bought Primesense and slapped FaceID on the tech and called it done. i'm guessing they needed to improve the tech a bit more to make it secure and not prone to spoofing.
[doublepost=1510077472][/doublepost]

Per iPhone X? Maybe $2?

You're all shouting about R&D but considering the volumes of phones it can't be significant to the cost per unit.

what? why per phone? i'm asking how much did it cost to develop the hardware design/software for FaceID. it wasn't a rhetorical question.

 

[MacsRuleOthersDrool]

This is a garbage analysis. They estimate the display to cost $65. We know that is wrong, as KGI (who is essentially perfect) estimates it at $120 - $130. Given the quality of the display, I would lean toward KGI being correct - we should disregard TechInsights entire analysis.

Not only that; but the massive number of Apple-branded chips inside the iPhone are ALL completely "black boxes" on the BOM as far as "cost" goes. So, 90% of the ICs in the iPhones are NOT amenable to ordinary "Cost Analysis".

And a 3X margin over BOM Cost is not at ALL out-of-line. Doesn't anyone ever watch Shark Tank?