iPhone XS Max Component Costs Estimated at $453 [Updated]

[shplock]

You are right. Still this article is bogus. Apple does have an incredible margin but it’s not anywhere near where this article suggests it to be.

Sorry but it is. Apple did not get over $250 billion cash reserves by making hardly any profit at all. They make huge vast profit margins for a reason.
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Apple's net margins are in the 20% range. Good, but not spectacular.

Try more like 40%...which is vastly spectacular. After all they did not make over $250 billion by making a piddling 20%

 

[mmomega]

Exactly. I was surprised to find a SIM tool in my XS today - how much did that cost? Kidding - but nice to see as none of my prior iPhones came with one and I hate using paper clips. How can I tell if it is liquidmetal?

I know.
I remember when those were included in the first iPhones. And then these articles about Apple making them out of some new liquidmetal and then we didn't see SIM tools again for 7-8 years

 

[guspasho]

What is the labor cost, and why is that never discussed?

 

[shplock]

Yeah, I'd like these to factor R&D and marketing too. At least make an attempt at it. The simple-minded get worked up over these articles; and judging by current events that is a rapidly growing demo.

Most of the costs you and others point to can not EVER EVER be included in the actual cost of the iPhone. Simpler accounting. This is whyApple make about 40% profit margins per iPhone. This is why they have over $250 billion cash reserves.
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So if the Xs MAX was 64GB like the XS, component cost would be $424 vs $395? The Max carries quite a premium over the Xs!!

Anyway, as others are saying, these approximations don’t account for the actual manufacturing costs, plus development, design, and testing, plus all ancillary costs required to run a business.

They don't need to. The costs you and others keep bleeting about can not be included. Only some can be included. Most can not for reasons above most people's heads. Apple make vast profits. Simple as..truth..period. They are not one of the richest companies in the world for nothing.

 

[MoreRumors?]

Go look at Apple's Quarterly Results and keep in mind they are quarterly and not annual so do the math.

 

[shplock]

Because overhead and engineering and labor are free.

They are in relation to costs of making the phone. You can not include them because you can not EVER include costa that are needed in order to make the device. I.e component costs could be included because Apple can decide which to include thus having control over cost. Labour costs can not be included because without labour there is no phone..there is no Apple.
Apple are just about the richest company in the world and they did not get there by making pathetic profits. They can charge what they like but when they now charge as much for an iPhone as they do for a MacBook it is taking the smeg somewhat.

 

[alexnyc8]

I deeply resent this attitude of "only paying for hardware".
As a professional software engineer I feel that this attitude devalues what I do for a living.

Your 7+ "works like a charm" sir because you continue to get FREE software updates.

Does anyone on that other platform enjoy those, and major OS updates, every year for 5 years? (iPhone 5S got iOS12)

Project much? Where have i stated "paying only for hardware"? When i bought my 7+, i made a conscious decision to purchase a product to suite my needs - even in 2016 it was overpriced, but I despise google and will never go with an Android phone, which basically mandates handing all your personal data to Google. Now, Apple is only slightly better in this regard, and the sad state of things is that there is no other competition out there - you are limited to IOS or Android (too bad WinPhone failed, but its entirely MS fault for not listening to their customers). Either way i paid for it upfront, full price (850+tax for the 128GB model - wanted a Qualcomm modem unit instead of intel on Tmobile).

You say free software updates - the only thing free my friend is cheese in a mousetrap, and "free" IOS12 performance improvements was forced by the IOS11 "forced obsolescence" that probably pissed off more people than even Apple expected to (along with Battery fiasco). Either way i knew that paying the premium price, it would be fair to assume that the phone will last at least 3-4 years which remains to be seen (i am mostly talking about degradation of non-replaceble battery here as i usually keep the original IOS shipped with the device, but IOS12 is a game changer with addressing "planned obsolescence" for the first time, and for this i give Apple credit, although to be fair i am convinced they didn't do it out of kindness of their heart but it was forced on them by IOS11 crap performance and complaints (bought my wife an 8 last year, upgrading from a 4s and IOS11 was always sluggish from the start - I skipped 11 entirely on my 7+).

All that said, the whole 64 vs 128 debate which i personally was arguing is a perfect proof of Apple douche tactics. Yes, they are free to do as they please, but its a douche move, and eventually it will bite them in that special place.

 

[shplock]

Finally someone who gets it

Sorry but you both are wrong. Some of those costs can be included. Most can not.Apple still at end of day makes HUGE HUGGGGGGGGGGGGGGGGGEEEEEEEEEEEEEEEEEEEEEEEEE profits and when they now charge as much for an iPhone as they do a MacBook it is taking the smeg a lot.

 

[ryanwarsaw]

Vote with your wallets people. If you go out and buy one on day one Apple will continue raising the prices.
The people here who attempt to justify Apple price increases are funny nevertheless. Yes Apple can charge whatever the market will bare (at least as long as there is 0% financing subsidy such as common in US), luckily for me though, my 7+ works like a charm (previous one was a 3GS) and i intend to keep it until it falls apart

Okay we will see you in a few years when prices are even higher.

 

[shplock]

Of course you’d wish, but it’s science fiction.
That’s not how it works. The price is material is different (and much lower) than the total cost per unit.

Apple make about 40% profits per iPhone...that is science fact not fiction.

 

[ZCT]

I always find these teardown reports so incredibly stupid.

Based on their own words, they had to make certain 'assumptions' they had to guess at a lot of things. But then they put out an estimate to the dollar, without even including any of the real costs of bringing a product to market. Just so idiots on the Internet can write stuff bemoaning profit margin, and perhaps some speculation as to what Steve Jobs would have thought about it all if he were not dead.

It's all such nonsense.

We all know that the cost of producing a product is a lot less than the retail price. Which is why I can buy a bunch of grapes from my local farmer at a different price to buying them in Whole Foods, and a different price again if I buy a bottle of wine.

 

[shplock]

While a certain markup is undeniable, your post is incorrect. By changing a component, even if it’s just memory, they have to create an adapted line of production, track material, perform custom testing, and most likely submit and follow different paperwork for government approval. There is some important added cost there.

NOpe...nope and more nope! Pure profits at end of day...They can not include costs that have no choice. They need to spend those costs in order to change the memory that then can not b included and also you forget that economies of scale mean those costs are spread out over millions and millions of phones resulting in hardly nay extra cost at al for the ones that can be included.

 

[Rogifan]

Gotta love that markup. Wish I could get into a business like that.

What do you think the cost of a pair of Nike Jordan shows is compared to what they sell them for?

Anyway, per Apple’s quarterly SEC filing their gross margin was 38.3% last quarter. That figure includes services which we know are becoming a greater percentage of Apple’s revenue every quarter and have higher margins than hardware.

 

[0924487]

No, I’m just saying they make good money off iPhone’s.

I think if Apple is not pushing it, $699 entry price tag for iPhone XR, $799 for iPhone XS, $949 for iPhone XS Max would be reasonable. Make iPhone 8 available for $549, iPhone 8 Plus available for $649, and iPhone X for $749

All for 64GB. Plus $99 for 256GB, plus an additional $149 for 512GB for all models. This is how I would price them.

 

[shplock]

You and TIMUSCA are 100% correct. Workerbees are understandably clueless about true business costs. As in this case workerbees see component cost and think “Oh, we will tack on a bit more for profit”, nope sorry it does not work that way. There is much more costs to any business pricing model than component cost. Business charge three times or more over their costs. They have to have money for what y’all mentioned plus money for their next purchase for selling to the public, many types of insurance, taxes, put money in savings, rent and utilities, upkeep money for the business, must consider shrink as well, left over money to feed their family and family needs. A business in a mall or strip mall and the like there is also CAM. A business needs to consider new and replacement equipment costs, contingency funds, money for raises and travel, employee expenses are astronomical, wow the cost list goes on. Component cost and sales price are not a zero-sum-gain, a business can not stay in business with even 100% pricing over product cost. Workerbees, go start and run a business, you will be shocked. Some folks sold their buisness to an employee yet remained on as an employee, they said they cleared more money as an employee with considerably less headaches.

Gotta love you arm char experts lol. sadly you forget that businesses can not EVERRRRRRRRRR include all costs from development to staff and anything in between. Just does not happen. Do not treat apple like a poles charity they are a successful $250 billion rich company for a reason! They gouge the customer for all they can get. Enough is enough.

 

[dotnet]

The iPhone XS Max with 256GB of storage costs an estimated $443 to make, according to estimates shared by TechInsights in a teardown of the new device.

But do people ever learn from these valuable insights? No.

Do it like the smart people at TechInsights, spend the $443 and make your own phone, instead of paying Apple $1250. Keep the rest.

 

[shplock]

I don’t know what you’re talking about, this is how every business works. You have your parts, then labour, in this case there’s manufacturing, shipping, advertising, the development cost not just for the hardware but the software that will support it for the next 5 or more years. Theres the overhead to keep the company assets paid (taxes, electrical bill, salary’s, waste, cleaning, etc) and only after all that is added up can you cone out with maybe 10-20% profit. That’s why older phones go down in price, you’re no longer paying the development or advertising costs anymore, parts are cheaper and more.

There’s a lot more to a product and service than what it costs for parts...

Not a much as you make out. You can not include all costs in the cost to make a iPhone. basic accounting 101. This is why Apple has over $50 billion cash reserves. They did not get that by making 10-20%. They make about 40%.
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You think it should cost $450?

I'll give you all the components individually and you see what you can do with them with no software or guide on how to put them together.

We'll also just skip paying the engineers, scientists, and other geniuses that designed these devices.

You can not include many of those costs. You just can not. Without the labour there is no Apple. So it is a cost that is not allowed to be added. PERIOD!

 

[dotnet]

Try more like 40%...which is vastly spectacular. After all they did not make over $250 billion by making a piddling 20%

You think that's spectacular? Look at TechInsights, they churn out crap at no material cost at all, and keep all the ad revenue. 100% profit!

 

[lewdvig]

Most of the costs you and others point to can not EVER EVER be included in the actual cost of the iPhone. Simpler accounting. This is whyApple make about 40% profit margins per iPhone. This is why they have over $250 billion cash reserves.
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They don't need to. The costs you and others keep bleeting about can not be included. Only some can be included. Most can not for reasons above most people's heads. Apple make vast profits. Simple as..truth..period. They are not one of the richest companies in the world for nothing.

Apple can allocate everything down to the individual unit level. They can get as granular as they want. That includes human costs and all their actual or hard coded cost centre allocations. So this info exists and is likely what’s Cook is referring to when he says numbers like the ones on the news post here are way off.

An analyst could interpret Apple’s filings and make some educated guesses about costs and how to allocate them, just like they do with the bill of materials.

I’d continue arguing with you but by your tone I think I’d get further talking philosophy with the wall.

 

[yaxomoxay]

NOpe...nope and more nope! Pure profits at end of day...They can not include costs that have no choice. They need to spend those costs in order to change the memory that then can not b included and also you forget that economies of scale mean those costs are spread out over millions and millions of phones resulting in hardly nay extra cost at al for the ones that can be included.

They can’t be included? What does it even mean? Apple spent the money, the costs, all of them, are included in the cost of the item. Now, how they track it I don’t know (I am pretty sure they have a pretty good software for that), but accounting 101 teaches you that material is just a small percentage of the costs of such a project.

 

[DNichter]

What do you think the cost of a pair of Nike Jordan shows is compared to what they sell them for?

Anyway, per Apple’s quarterly SEC filing their gross margin was 38.3% last quarter. That figure includes services which we know are becoming a greater percentage of Apple’s revenue every quarter and have higher margins than hardware.

I’d be interested to know what their margin per iPhone is. With marketing, R&D, labor, maybe $100 extra per phone? Either way, they are making a ton. No knock on them, it’s a business, just quite a healthy margin that’s all.

 

[yaxomoxay]

Apple can allocate everything down to the individual unit level. They can get as granular as they want. That includes human costs and all their actual or hard coded cost centre allocations. So this info exists and is likely what’s Cook is referring to when he says numbers like the ones on the news post here are way off.

An analyst could interpret Apple’s filings and make some educated guesses about costs and how to allocate them, just like they do with the bill of materials.

I’d continue arguing with you but by your tone I think I’d get further talking philosophy with the wall.

Precisely. “Economy of scales,” you know.

 

[Rogifan]

Not a much as you make out. You can not include all costs in the cost to make a iPhone. basic accounting 101. This is why Apple has over $50 billion cash reserves. They did not get that by making 10-20%. They make about 40%.

Per Apple’s last quarterly SEC filing it’s pre-tax profit margin is 25%. For a comparison, Microsoft’s FY2018 profit margin was 33%. Facebook’s last quarterly profit margin was 44%.

 

[DNichter]

I think if Apple is not pushing it, $699 entry price tag for iPhone XR, $799 for iPhone XS, $949 for iPhone XS Max would be reasonable. Make iPhone 8 available for $549, iPhone 8 Plus available for $649, and iPhone X for $749

All for 64GB. Plus $99 for 256GB, plus an additional $149 for 512GB for all models. This is how I would price them.

Definitely more reasonable. Unfortunately for consumers, Apple products sell at what they price them today. That’s likely not going to change.

 

[Rogifan]

I’d be interested to know what their margin per iPhone is. With marketing, R&D, labor, maybe $100 extra per phone? Either way, they are making a ton. No knock on them, it’s a business, just quite a healthy margin that’s all.

Of course Apple will never disclose it but what we can be pretty certain of is services have a higher margin than hardware yet even though services are becoming a bigger percentage of revenues Apple’s gross margins have stayed around 38%-40%.