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iPhone XS Max Component Costs Estimated at $453 [Updated]
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It is listed in the breakdown at $24.50 for “Test/Assembly/Supporting Materials”
Apple is one of the cheapest stocks in the S&P at ~15X 2019 earnings.
Apple is worth $2T today and thus is significantly undervalued.
They are worth $1.1T because they make $50+ billion in profit annually, more than twice ANY company on the planet, the biggesr buyback in history, and $250B in cash.
You want to talk overvalued, look at NFLX, AMZN, CRM, TSLA, and even MSFT.
That’s not how accounting works, not including all the costs is how you go bankrupt very fast and piss off shareholders, especially if it’s a smalll business.
Apple has $50 billion in cash reserves by selling a lot of product and not spending that profit often. 10% may be low but 40%!? That’s just stupidity high, no company can survive charging 40% pure profit, it’s ridiculous.
The real number is about 22% (https://www.reddit.com/r/apple/comments/9il8ng/apple_profit_margin_in_2018_is_5_lower_than_in/) which is a fair number, while a company like amazon is at about 5% I believe. The difference is and why Apple has so much money is they seem to put all the cost into the devices like I said and charge a profit on top of that while amazon takes less profit to stuffs in right back into R & D I believe. Neither way is bad but Apple’s way makes more money, hence the huge cash reserve.
For a start, the first sentence is wrong:
"The iPhone XS Max with 256GB of storage costs an estimated $443 to make"
It's not the cost to make, but the cost of components, which isn't equal. Cost to make should include the labour, logistics to get the components there, stocking cost, etc. everything until it sits in the door of the manufacturer waiting for pickup. 443 USD is simply the cost of the components, which is lower than cost to make.
Still, Apple have a pretty penny on these items, not 50% profit margin as the article suggests.
"The iPhone XS Max with 256GB of storage costs an estimated $443 to make"
It's not the cost to make, but the cost of components, which isn't equal. Cost to make should include the labour, logistics to get the components there, stocking cost, etc. everything until it sits in the door of the manufacturer waiting for pickup. 443 USD is simply the cost of the components, which is lower than cost to make.
Still, Apple have a pretty penny on these items, not 50% profit margin as the article suggests.
What other people choose to spend their money on is their business not yours.With Apple's economics of scale, i very much doubt thats the case. The real issue here is good old greed and ability to milk what market will bare (Would love to see the % of people who pay for the phone outright, vs those who have to finance it, or even better, how many sales would not happen if financing was not 0% or was not available at all). There is also working 20 and 30-somethings who live with their parents and spend hundreds on monthly cell phone payments, because you
know, they have to show off the latest toys to their peers.
Different people see different value in products. Apple pays for the material, then pays researchers, developers, software coders, builders, and beta testers. All this work costs a lot more than the raw material. Apple is a business, they make excellent products that people love and will always come back.
If your iPhone 3GS lasted you the time until you got an iPhone 7. You got a damn good deal.
1) iPhone XS Max Component Costs Estimated at $443
2) The iPhone XS Max with 256GB of storage costs an estimated $443 to make
Statement 1 & 2 are not same, component cost is not same as Component + Assembly cost.
2 includes manufacturing cost and yield loss for each and every component at each and every stage.
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Add another 10$ for all those ok, still nice profit
Sarcasm.
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Sarcasm
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And this doesn't include Design, development cost, assembly cost, yield loss for every part at every state in assembly process, shipping, logistics, marketing, R&D, warranty cost, and a lot more.
2) The iPhone XS Max with 256GB of storage costs an estimated $443 to make
Statement 1 & 2 are not same, component cost is not same as Component + Assembly cost.
2 includes manufacturing cost and yield loss for each and every component at each and every stage.
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anybody can throw a number out there and people will believe those numbers.
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That number is just an estimate of the component cost, just an estimate because other than Apple no one exactly knows what each of those components cost and that cost doesn't include design, development, yield loss at each stage, assembly & testing cost.
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Add another 10$ for all those ok, still nice profit
Sarcasm.
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are you sure, I think Xr doesn't have 3D Touch, Xs & Xs Max do have 3D Touch.
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I agree, if a Chinese manufacturer can make a smart phone for 300$ why can't Apple do it, Apple please give me iPhone Xs Max with 128GB storage for 350$, if not I am not buying iPhone.
Sarcasm
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This is just an estimate, no one except Apple knows exact cost of components.
And this doesn't include Design, development cost, assembly cost, yield loss for every part at every state in assembly process, shipping, logistics, marketing, R&D, warranty cost, and a lot more.
Hmm... At the other end is Xiaomi... No more than 5% profit on each unit with less advertisement resources and engineering to boot. They have to advertise on their ui just to earn their profit
I find your reasoning funny. If they are so into R&D would you be happy wth a $2000 phone or a $3000 one?
For some reason, the introduction of iPhone X has distorted the normal strategy of iPhone' BOM cost and margin. Or may be Apple is pushing the price to support the R&D cost on leading edge components. For years the BOM + Patents and Software cost is basically operating at Gross Margin 50%.
And if you consider Mediatek could sell an 12nm SoC at 60mm2 die space for less than $20 with profits, you can tell the $50 for Apple A12 is simply wrong. ( Tuning and Design belongs to R&D cost )
And if you look at the BOM, there is no way iPhone Xr is operating at 50% margin.
So yes the introduction of iPhone X, and now Xs, Apple has distorted the simple pricing scheme that Apple have been using for well over a decade. And Apple has got rid of iPhone SE, its lowest margin ( By Apple's standard ) product.
I am thinking this is sort of a way Apple tries to maintain its gross margin and net margin with its increasing services revenue. App Store, "only" operates at less than 25% Gross Margin, when you compare to Apples total average out to ~38% Gross Margin.
I am not sure if Time Cook worries or look at this numbers, and tries to maintain it. But Apple is seriously testing its price elasticity to its limits. And I am worry this mindset will force Apple into a corner that they cant get out.
[doublepost=1537941107][/doublepost]I forgot to mention, the good thing about these BOM cost analysis is that you see lots of room for pricing improvements. DRAM could / should someday be half the price, it is ridiculously expensive at the moment. NAND already sees down trend, both DRAM and NAND should see lots of pricing pressure in 2019 and 2020. ( Finally ). Material Cost, Assembly, Power Management Components, WiFi. OLED could see continuous price reduction in the next two years. May be drop to lower than LCD within 5 years time, that is 50%+ reduction in 5 years time.
And if you consider Mediatek could sell an 12nm SoC at 60mm2 die space for less than $20 with profits, you can tell the $50 for Apple A12 is simply wrong. ( Tuning and Design belongs to R&D cost )
And if you look at the BOM, there is no way iPhone Xr is operating at 50% margin.
So yes the introduction of iPhone X, and now Xs, Apple has distorted the simple pricing scheme that Apple have been using for well over a decade. And Apple has got rid of iPhone SE, its lowest margin ( By Apple's standard ) product.
I am thinking this is sort of a way Apple tries to maintain its gross margin and net margin with its increasing services revenue. App Store, "only" operates at less than 25% Gross Margin, when you compare to Apples total average out to ~38% Gross Margin.
I am not sure if Time Cook worries or look at this numbers, and tries to maintain it. But Apple is seriously testing its price elasticity to its limits. And I am worry this mindset will force Apple into a corner that they cant get out.
[doublepost=1537941107][/doublepost]I forgot to mention, the good thing about these BOM cost analysis is that you see lots of room for pricing improvements. DRAM could / should someday be half the price, it is ridiculously expensive at the moment. NAND already sees down trend, both DRAM and NAND should see lots of pricing pressure in 2019 and 2020. ( Finally ). Material Cost, Assembly, Power Management Components, WiFi. OLED could see continuous price reduction in the next two years. May be drop to lower than LCD within 5 years time, that is 50%+ reduction in 5 years time.
EDIT: Forgot the XS Max cost more.
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It doesn’t?
On both it’s $150 more to go from 64 to 256GB and $200 to climb from 256 to 512.
I'd suggest the costs for each phone to Apple is far lower than this.
You can't price it by saying, oh, the camera module would cost me $47 (for example) to buy.
Now go to the same camera supplier and say: "Ok, we're going to be ordering 30 million of these, what type of price will we get them for?"
Mass bulk costs will be way way way lower than one off pricing for these items.
Hence why I suggest the real cost if far far lower.
You can't price it by saying, oh, the camera module would cost me $47 (for example) to buy.
Now go to the same camera supplier and say: "Ok, we're going to be ordering 30 million of these, what type of price will we get them for?"
Mass bulk costs will be way way way lower than one off pricing for these items.
Hence why I suggest the real cost if far far lower.
I see you're right. I failed to account that the Max is $100 for expensive than the regular.
Open a restaurant. Much higher markup between the cost of the food and the bill.
Or even better a bar. Just ignore all the other stuff like employees, rent, etc. Cause the only number that matters is the markup!
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. At $443, the iPhone XS Max components are nearly $50 more expensive than the estimated $395.44 component cost of the 64GB iPhone X.
Article Link: iPhone XS Max Component Costs Estimated at $443
I think TC would have got this done for $250-300 for sure.....just BOM in the OEM market will be different than for volume buyers in millions! That only makes the iPhones cheaper and more profitable! LOL for Bankrolling investors!
You are talking about gross margin. That’s the difference that it makes to Apple if you buy a phone or not. Your money minus all expenses that Apple has for giving you the phone. It doesn’t count expenses that Apple has anyway, like development, shop rent, building new headquarters and so on.
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Most businesses have 300 percent difference between Bill of materials and sale price or more. Some numbnuts assume that is profit.
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You don’t have a clue what gross margin is.
Also Apple would have made bargain and might have ordered lots of old parts yet critical ones(like battery tech, 3D touch, displays, camera etc...as a repeated orders not exclusive to iPhone XS or XS Max alone....they woulf have managed to strike heavy discount on aged tech and components further!
Making charges are negligible ($15-$20 max $30 per mobile) logistics almost free from China!! Only in the American end they have to pay anywhere $10-$20 for delivery.
What development? It's a same phone with different color.