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Teardown Finds iPhone 5 Costs Apple About the Same As Did 4S
Nerval's Lobster writes "A physical teardown of the iPhone 5 by IHS iSuppli reveals that Apple has managed to keep its materials and manufacturing costs roughly in line with that of the iPhone 4S. The firm estimated the Bill of Materials for the iPhone 5's low-end variant at $199.00, rising to $207.00 once manufacturing costs are entered into the equation. It tallied the BOM for the 32GB version at $209.00 (or $217 with manufacturing) and the 64GB one at $230.00 (rising slightly to $238 with those manufacturing costs). Compare that to the BOM for the iPhone 4S, which IHS iSuppli estimated at $188 for the 16GB version (rising to $196 with manufacturing costs added in), $207 for the 32GB version ($215 with manufacturing) and $245 for the 64GB version ($254 with manufacturing)."
Reader redkemper writes with another kind of comparison of the newest iPhone to its predecessor: "Apple didn't spend too much time talking about the iSight camera at the iPhone 5s unveil event because it's mostly the same as the one found in the iPhone 4S. Thankfully, iMore grabbed an iPhone 5 and iPhone 4S and did a fantastic shoot-out between the two device's rear cameras. [The new camera] just barely edges out the iPhone 4S's year-old camera."
You'd have to actually change something to increase cost.
I assume Apple had been paying Google something for Google maps which was replaced by Apple maps. Depending how you wan to amortize the R&D, that was a unit BoM savings if Google has been getting a per unit fee.
You don't need a high quality camera if all you do is post crappy instagram pics.
i read these and almost every flagship from from every manufacturer is in the $180 to $200 range. Apple's bill of materials tends to be a little higher most times but their margins are also higher because they make one phone for all around the world. iphone 5 and LTE is an exception with different models supporting different frequencies around the world
Depending how you wan to amortize the R&D, that was a unit BoM savings if Google has been getting a per unit fee.
Possibly, but overall Apple is paying a lot more to built out a mapping solution of their own compared to just using Google's. The cost of that would not be figured into the raw hardware calculations iSupply is doing...
I don't think in the end it is a savings.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
How horrible that someone sells a product that cost more than the sum of their part!
We shouldn't have to pay for those millions in R&D and those failed designed they were working on.
We shouldn't have to pay for the salary of the employees at apple.
Heck those guys at Foxconn get next to nothing anyways... Why not go to the next logical step and have them work for free.
Unfortunately running a business you find that things are more expensive than the normal consumer realizes.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
8$ of the total cost of a iphone (or any other phone for that matter) is labor cost (probably not all of it). That's...overwhelming. This has to stop someday. There's no way you can compete with this.
So where does the "27% margin" come from?
Here's a link to the actual comparison, instead of a blog describing the comparison: http://www.imore.com/iphone-5-vs-iphone-4s-camera
"Apple didn't spend too much time talking about the iSight camera at the iPhone 5s unveil event because it's mostly the same as the one found in the iPhone 4S."
What? May I see it? I bet Safari is snappier...
Slashdot taken over by Apple shills.
I read that when Jobs was testing the first iphone prototype, the screen was plastic because it was thought to resist fracturing when dropped. After a few times in his pocket getting scuffed up by his keys, he told the team to replace the plastic with glass which eventually led to Apple using Gorilla Glass. He didn't give a damn how expensive or inconvenient the transition was going to be, an easily scratched face wasn't going on the iphone. Though the backing was scratchable, it was made of stainless steel which meant minor scratches could be buffed out if the owner cared to.
Given Ifixit's 30 second test showing how scuff-prone the new aluminum backing is, it's hard to imagine Jobs having greenlit this particular design choice.
???
Bigger screen, faster CPU&GPU, more ram, new camera? Oh wait.. they did that.
The most iPhone manufacturing "ecosystem" is now in China. It's not just moving Foxconn's operatoins over here, it's moving their suppliers and the suppliers of the suppliers and so on.
Also it's the way the Chinese do business. Here's the story that was told in the business press a while ago ....
When Apple was looking for folks to make their phones at the very beginning, one of their reps went back to China and saw this factory being built. When the factory manager was asked, "What's going on over there?" He responded, "That's just in case we get your business."
Apple hired them.
No American company in their right mind would build an entire new plant "just in case".
Flash forward and now the entire manufacturing chain is over there.
And it's happening to more and more industries. You just can't pick everything up and move it.
Gradually we're going to be a country of people cleaning the bedpans of the other people and finance our lifestyle with debt and asset sales - see Greece.
Obviously, Apple spent a lot of money on their new 3D global mapping system, which isn't included in this cost estimate. They've also spent money developing other aspects of the new version of iOS. And they spent money designing the new version of the phone, and it's updated hardware. Of course, they're going to sell so many of these it'll wipe out those costs pretty soon. Still, any new development is risky. Look at all the bad press they're getting over maps! If they have to pull it, it will be a complete loss. Contrary to popular belief, about half of the new products Apple releases are actually flops. But a flop costs as much to develop as a success. Fortunately, Apple is able to charge enough of a markup on their successful products to make up the difference.
Development, for starters.
Which part in the iPhone 5 or iPhone 4(S) develop, for starters?
For one, the CPU. From wiki:
"The A6 is said to use a 1.2 GHz[3][4][5] custom Apple-designed ARMv7 based dual core CPU,[1] rather than standard cores like in previous designs, and an integrated triple core SGX 543MP3[6] graphics processing unit (GPU) with the same performance as the previous Apple A5X processor found in the third-generation iPad. The SGX 543MP3 is running at 266MHz."
Software development has costs too. Even FOSS software has paid developers at times, the success of some FOSS projects has been tied to this fact.
Other reviews have noted that while the iPhone 5 camera is just a little better in normal light, it's much better in low light according to this review shooting in Iceland.
From other tests I seen, it seems to be about two stops better at high ISO shooting. Lower noise and clearer images.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
When Apple was looking for folks to make their phones at the very beginning, one of their reps went back to China and saw this factory being built. When the factory manager was asked, "What's going on over there?" He responded, "That's just in case we get your business." Apple hired them. No American company in their right mind would build an entire new plant "just in case".
No Chinese company would do so either. The Foxconn plant you are referring to was built by the Chinese government, not by Foxconn. The government was going to have somebody build something there, it just turned out to be Apple.
This is a good example of the subsidies the Chinese government provides companies. Its not just a disparity of wages, its the government providing a company with an old fashioned "company town" complex too.
Re:$240 to make and $800 asking price? So where does the "27% margin" come from?
Its the result of carefully engineering the supply chain and accounting so that the bulk of the profits are recognized by the foreign subsidiary in a different non-U.S. tax jurisdiction. That 27% is based on what the subsidiary "charges" the U.S. based headquarters for the product/parts.
So he says the iPhone 5 camera is "barely better" than the one in the iPhone 4S. Then in the article he says "But, if youâ(TM)re still not convinced that the iPhone 5 isnâ(TM)t quite a DSLR-replacer just yet, take a look at it compared to a Canon 5D Mark III. That ought to change your mind." Unless he is confused by too many "not"s in one sentence, that seems to say that the camera isn't very good compared to a professional camera. But to quote from the linked article: "The results are pretty amazing â" the iPhone takes worse photos but it certainly stacks up against a $4,000 professional camera. ". In other words, the camera in a $600 phone is not quite as good as a $4,000 professional camera, but it is not far away.
http://www.nokia.com/global/products/pureview/
Will it blend?
Did you mount a military-grade, variable-focus MASER on an unlicensed artificial intelligence?
iSuppli's business model revolves around finding you low prices for components (for a nice, hefty fee, of course) for your next big consumer electronics product; these teardowns are just advertising for that service. In order to pull customers in, they mark down the lowest plausible price for each component; it's unlikely that even Apple can get these low prices for each component.
Practially every teardown they show is low-balled, because there's no way to verify any of these numbers, and lower numbers gets them more contracting business.
You are easily led to think that the $207 is Apple's cost per phone. It's not.
It's the hardware cost (and most probably a low estimate as noted before).
Add to that all the licenses that Apple needs, FRAND and others (although some of these may be included in complete hardware components), software cost, hardware R&D, etc.
It will add up to a lot more.
I also object to the $8 "manufacturing" cost. Assembly cost would be more accurate since many of the parts, like the machined body parts, also include labor costs.
Its obvious Apple cut corners on the quality of materials used to make the iPhone 5 (scuff marks), the quality of construction of the iPhone 5 (light leaks and damage on arrival), and the quality of the software that is included in iPhone 5.
Also there are already component supply shortages because Apple moved away from using Samsung and instead finding cheaper competitors. And obviously nothing has improved over in China given the riots which suggests Apple hasn't improved the pay or quality of work conditions over there..
Apple is their own worse enemy. It won't be any one competitor that takes down Apple, it will be Apple rolling out a fiasco that will take them down. Something like what the iPhone 5 is amounting too.
What is hilarious is the excuses both Apple and its fan boys are using to defend what is amounting to one of the worst product roll outs Apple has offered in recent history.
The truth is that had Steve Job's been alive he would have been fuming of this disaster. Heads would be rolling at Apple today. He would never have allowed release of a new Map product that did not surpass the quality of the product it replaced, he would never have allowed the leaks of all the information about the iPhone including photos of the actual case months in advance, and he never would have allowed a product to be released that scratched if you blew too hard on it, not after the first few generations of iPods with flawed easily scratched materials.
It is very obvious that Apple peaked the moment Jobs died. To claim the iPhone 5 is the last of his legacy, the last product he was intimately involved in suggests that today's Apple has no respect for the man that made that company.
Tim Cook and Jonathan Ives should be both be fired. There are way too many people wanting iPhone 5 to be more then it is, but it really is just a disaster that few want to admit is possible.
I haven't thought of anything clever to put here, but then again most of you haven't either.
And they couldn't even make it the same thickness as the old iPhone so it would last one day on one charge?
If it didn't last a day I would agree. That's kind of the minimum for me for going without a charge,
But the iPhone 5 still lasts more than a day on a charge. I'm not sure exactly how much more on average having only had it for a few days, but I've not charged it during the day generally while i've had it, and it still has quite a lot of power at night. I think in the end I'd probably end up charging it every other day.
Given that, I'd rather have it be thinner. Though much thinner than this, I don't think they need...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
So why, in an unlocked european iPhone, going with flash size from 16 to 32 GB and from 32 to 64 GB costs 110 euro and to Apple this costs, respectively, 19$ and 39$? Not much development involved, and manufacturing is already factored in.
This is simply the maximum price the market will bear, and the product is developed up until the cost leaves enough profit (for an arbitrary definition of "enough").
This ignores the expense of laying out a new processor design BY HAND rather than algorithm.
My two year old Nokia N8 spanks both of them.