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iPhone X Costs Apple $370 in Materials: IHS Markit (ihsmarkit.com)
Engineers at marketing research firm IHS Markit cracked open the base version iPhone X, which Apple is selling at $999, this week. After preliminary physical dissection, the firm estimated that the iPhone X carries a bill of materials of $370. From their findings: With a starting price of $999, the iPhone X is $50 more than the previous most expensive iPhone, the 8 Plus 256 GB. As another point of comparison, Samsung's Galaxy S8 with 64 GB of NAND memory has a BOM of $302 and retails at around $720. "Typically, Apple utilizes a staggered pricing strategy between various models to give consumers a tradeoff between larger and smaller displays and standard and high-density storage," said Wayne Lam, principal analyst for mobile devices and networks at IHS Markit. "With the iPhone X, however, Apple appears to have set an aspirational starting price that suggests its flagship is intended for an even more premium class of smartphones." The teardown of the iPhone X revealed that its IR camera is supplied by Sony/Foxconn while the silicon is provided by ST Microelectronics. The flood illuminator is an IR emitter from Texas Instruments that's assembled on top of an application-specific integrated circuit (ASIC) and single-photon avalanche diode (SPAD) detector from ST Microelectronics. Finisar and Philips manufacture the dot projector. IHS Markit puts the rollup BOM cost for the TrueDepth sensor cluster at $16.70.
When he arrives at the customer's house, he inspects the faucet, installs a new rubber gasket, and gives the customer a bill for $100.
"This is outrageous," says the customer. "I demand an itemized bill."
The plumber quickly writes up an itemized bill:
Rubber Gasket: $0.50
Knowing where to put it: $99.50
And, of course, the cost of putting the phone together is negligible.
#DeleteChrome
Apple is a company that wants to make money. They also need to do things like, you know, pay people, rent/own/lease buildings/stores, pay for electricity, pay for marketing, bandwidth, servers, turn a profit, that sort of thing. It's almost as if they are selling phones in a capitalist society where they can set a price and people can choose to buy it or not. Gasp, they are selling their top of the line phone for significantly more than the parts required to make it cost!
I work at a software company. We don't even sell a physical thing, people just pay us for some bits they download. We must be doing an OK job because people keep paying us, it's like our software provides value for them to do work.
That's the essence of all economics. If you trace the components back to their source, its a few cents worth of sand, aluminum oxide and other ores and petroleum. Everything else is labor, licensing fees and debt service.
And taxes. So one could accurately say that an iPhone X costs $1000. Paid to Apple Jersey. Net profit for Apple USA: $0.
Have gnu, will travel.
Apple appears to have set an aspirational starting price
I'm aspirating as we speak thinking about coughing up some massive dough for this phone.
and a few drops of oil.
So the BOM is 1ct.
Markups like this, in all kinds of industries, are not uncommon, and quite frankly, are to be expected.
It is foolish to expect that a provider of a product will sell a product in retail for as low as they can and still make what they think will be a respectable profit when they can make far more by selling it for the most that they can that people are still willing to buy it for.
Is Apple being greedy? Of course they are... but it's their product, and they have absolutely every right to dictate how much they want the end user to pay for it.
File under 'M' for 'Manic ranting'
I am pretty sure it has more to do with your racist epithets than your question.
When you cant win, ad hominem.
Please don't feed the trolls.
And of course assembly, quality assurance, engineering, shipping, etc... are all free. What greedy bastards, how dare they make money off of a product people want to buy.
People who get upset over margins have never ever run a business.
Dan Ariely, an economist, also has a similar story to share:
As I mention in the video, what's really interesting is that this locksmith was penalized for getting better at his profession. He was tipped better when he was an apprentice and it took him longer to pick a lock, even though he would often break the lock! Now that it takes him only a moment, his customers complain that he is overcharging and they don't tip him. What this reveals is that consumers don't value goods and services solely by their utility, benefit from the service, but also a sense of fairness relating to how much effort was exerted.
Emphasis is mine.
These cost to make it versus sale price comparisons are useless.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
There's also the cost of developing and maintaining software. Apple develops the OS and is fully responsible for maintaining it, unlike Samsung. Someone is getting paid to write the software, update it, and ensure that new versions continue to work on older hardware. Apple generally provides updates for older devices longer than Samsung and other phone manufacturers.
A mash-up of components without software and without online services would be as useful as a rock.
What about all the services included with the iPhone? Email account, iMessages, Facetime, iCloud, App store (some applications are free but Apple still has to run all the backend even if you never buy anything there).
There's also all the engineers to pay for designing the hardware, all the software developers to pay for writing iOS and all the included programs.
#DeleteFacebook
You forgot support. And the updates that will inevitably be necessary.
Rubber Gasket: $0.50
Knowing where to put it: $4.50
Having the experience to actually change the rubber gasket without fucking everything up and without making a leaky mess: $95.00
#DeleteFacebook
Pics of the five women or it didn't happen.
#DeleteFacebook
What about all the services included with the iPhone? Email account, iMessages, Facetime, iCloud, App store (some applications are free but Apple still has to run all the backend even if you never buy anything there).
There's also all the engineers to pay for designing the hardware, all the software developers to pay for writing iOS and all the included programs.
I see no mention of paying for QA/testers; judging from the almost daily reports of significant bugs/flaws/etc in the software, maybe Apple should direct some of it's generous margin profits to hiring more of them.
Trump is germophobic, like that TV character Monk.
I think this BOM is total BS and whitewash. You can get a laptop for $600 retail with a bigger screen, faster CPU, more RAM, bigger secondary storage. Apple pays way less than a typical consumer or distributor, because they are a business and they buy in bulk resulting in low component price.
A realistic BOM is probably close to $200-$250. They still have to pay the design costs, manufacturing costs etc. That is probably another $100-200.
rubber gasket
In my limited experience, they are usually called washers or o-rings. Gaskets usually don't involve moving parts so rarely fail.
Yeah, personally, I'm shocked the BOM is so high!
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... is less than 10 cent.
*Sigh* Another ass-hole who does not how the fucking market works.
The market dictates the price. If stupid morons are willing to pay $999, then that's the price. If the product doesn't sell, then a new price is set.
Apple dictates nothing.
And clearly their products are over-priced.
Today, the Internet was completely shocked to find out that Corporations sell things above cost -- what is collectively called "at a profit" in the business -- in order to sustain their infrastructure, support, and logistics of all the engineering, design, implementation, fees, certifications, and quality assurance needed to sell a product.
When Millennials were asked:
"How do companies produce these things you buy?"
they replied:
"I thought it was all magic pixie dust. What do you mean "people" have to spend months writing software for our devices? What's an Operating System? How is it different from an app?"
More News at 10. Film at 11.
Even if the cost of manufacturing in Asia s minimized, you need to factor in all the intelligence/research that went into the making of that device.
Yeah, they do. They fail all the time. In fact it can be quite destructive on an automobile.
Taxes? What percentage of that $999 goes to taxes?
/Oblg. X marks the spot, aka Handyman's Invoice
This child post contributes so little to the conversation that the parent post sent it to rehab and disowned it.
Knowing Apple, probably somewhere in the vicinity of 0.01%, to Ireland.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I'd recommend you read the statements of work your tech consultants are providing you before you actually pay them.
A $500 meal at a fancy restaurant is made from $10 worth of food.
How many years of R&D were behind this phone. How many failed ideas tried. Redesign Because of changes in competition... plus they will only sell this phone for about a year until the next version.
The parts breakdown is more or less what will be needed for a knockoff product that will get sold next year.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
The cost of a product only dictate whether it is made or not. If you cannot sell at more than cost, it's insane to produce it. Aside of that, and as soon as the price you can ask for (and getting it) is higher than cost, cost becomes a minor variable in the price.
The main question is at what price you can maximize your profits. Can I sell so many units more if I make it 10 bucks cheaper that it offsets those 10 bucks? Will my sales drop less than what asking 10 bucks more per unit nets me? This is what determines the price.
Not cost.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
How much do you charge to fart your power bars into a jar?
Wish I had mod points. I work at a manufacturing company, our cost of materials is on average around 15%. We would sell iPhones for almost $2,500, and that would be the cost to Apple. Folks are kidding themselves if they think Apple ever even sees this price, they don't even manufacture it themselves, it's all outsourced and you can bet your ass Apple knows how much the components cost and would never expect to pay close to that little for their hardware. Then there's their cost to develop the OS, which is where all the value actually lies in the iPhone, and it's starting to look like a thousand bucks for the phone isn't that bad a deal.
What have you done to further your tech career today chris?
Nothing. Probably.
What else have you done instead: Tried to make money off ebooks, make money off vlogs, make money off link spam, make money double checking lotto tickets from the hepC covered streets and alleyways of Silicon Valley.
A regular fat Einstein my friends. A less mobile Stephen Hawkings ladies and gentlemen.
But I was thought the free market would dictate prices and I would get the best value for the product.
Comment removed based on user account deletion
Property tax Business part of Social Security tax Tax on consumable items Tax on utilities Tax on capital items Tax on stock transfers and sales Tax on retirement accounts Tax on taxes Lots of taxes once you understand the American Syatem. Most Taxes in the USA are hidden taxes.
That was, in fact, exactly what I was saying.
File under 'M' for 'Manic ranting'
Good one, but I like this allegory better:
A locksmith is just getting started. He gets a call to a homeowner who has locked their keys in their house. He shows up, pulls out his lock pick set, spends half an hour working the lock before he gets it open. He scratches up the lock face a bit and loosens the pins so the key now rattles a bit in the tumbler. Hands the homeowner a bill for $50, which, seeing all the hard work the locksmith has done, gladly pays.
Fast forward ten years. The locksmith is now an expert at picking locks. He can do so without so much as scratching the lock face or damaging the lock in the slightest. Gets a call to a homeowner who has locked their keys in their house. Locksmith shows up, pulls out the correct tools the first time, and unlocks the door in ten seconds flat. Hands the homeowner a bill for $50, and promptly gets yelled at for having done hardly any work at all.
My Other Computer Is A Data General Nova III.
The *only* reason a profit-seeking company has to ever try and make its products more affordable is if they feel that their profits would actually go up as a result. If you have already have a massive audience that is ready to buy virtually anything you put out at almost any price, you don't have much incentive to try and price your products to draw people away from the competition, or else you market your products as so far outside of the league of your competition that there is no reason to expect them to be similarly priced.
File under 'M' for 'Manic ranting'
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Itâ(TM)s kind funny that this is coming from IHS Markit, though. Those guys canâ(TM)t even tell what makes up the price of their own services. We once disseminated their prices with the help of some analysts and I can tell you this: the profit margin of Apple is nothing compared to theirs.
Also, if I had all the BOM on hand, what the fuck would I do with a bucket of stuff?
It's not self-assembled, self-shipped, self-marketed.
It little behooves the best of us to comment on the rest of us.
to Ireland
Jersey, Channel Islands. Try to keep up.
Apple money moves faster than street truck tacos.
By your own logic... Clearly their products aren't over-priced since people are buying them by the millions
Jewish is not a race, it's a religion.
I love that you have to post at -1. Like you have your own special brand of shittiness.
If Anonymous Coward is the bologna and cheese sandwich with yellow mustard.
You're one but sourced with dollar tree ingredients, the white bread is a little thinner, the bologna has more fat, the cheese has a plastic quality and the mustard is like water.
That's you in sandwich form.
A mash-up of components without software and without online services would be as useful as a rock.
What about all the services included with the iPhone? Email account, iMessages, Facetime, iCloud, App store (some applications are free but Apple still has to run all the backend even if you never buy anything there).
There's also all the engineers to pay for designing the hardware, all the software developers to pay for writing iOS and all the included programs.
A $999 PC has all that (and more), but the BOM cost is much higher and the profit margin much lower. Are you saying engineers who design PC and components, and its software, are working for free?
Ah, no it's not greed - which is a nebulous concept anyway and means different things to different people.
Also - Apple doesn't dictate a price. If so they could charge $2000 for it. Except at $2000 they would probably make less profit selling fewer phones. The price is based on market demand. Look at the prices for the 6s, 7, and 8 and see how pricing and demand work here.
Finally - profit is important to cash flow, the ability to borrow from a line of credit, investors and owners, employee morale, and many other decisions. Non profits do not make anything like an Apple iPhone.
PS - to all the rest of you barking about Apple Jersey, let's remember that Apple paid $35 billion in taxes last fiscal year. Not exactly chump change. That means they could have charged you less for that iPhone, but paid governments around the world instead.
Markups like this, in all kinds of industries, are not uncommon, and quite frankly, are to be expected.
I am surprised at how LOW the markup is. I have worked for companies that charge over a thousand dollars for a product with $20 worth of components. They have no choice, because their NRE is spread across far fewer units.
Anyway, Apple is not paying "list price", and their BOM is likely way less than $370.
They're have to ask them to move to the Channel Island of Jersey to pay for them, since that's where all their money is though...
Well yes... but they do, in a way, dictate the price. They make their own decision how much of a potential market they are willing to sacrifice to price it at a higher level, and price it accordingly. It is the actual market demand at whatever price they offer it that determines how much of it will really sell, but you can be sure that if Apple figured they could make more money in the short term off of iPhone sales by having a $2k retail price on it, they would totally do that.
File under 'M' for 'Manic ranting'
I'm also quite involved with manufacturing, 10-15% is a general number that is oft agreed upon in our business for SGA&P (P being profit). That is basically the markup on the cost of producing the goods.
You're kidding yourself if you think Apple doesn't wield huge bargaining power for their business. I believe Apple can purchase a finished good for under $500 if their component cost estimate of $370 is accurate.
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
That isn't a big markup. 379 is just the base item. It does not count design & research, continued support and warranty, logistics, or the cost of the marketing or the actual retail store that the customer buys it from.
Exactly. Well put.
Also add costs for employee overheads such as heath care, pension, annual leave, facilities, security, advertising/marketing, legal, intellectual property / patents, and so on.
If an adult seriously thinks a product should cost what the raw components cost, then they need to a children’s book on how the world works.... one of those “What People Do All Day” or “Different Jobs Wot There Is” type books, with pop-up tabs and colourful pictures.
What Job Would You Like To Do When You Grow Up?
We have every right to talk about how stupid it is. :) Oh silly stupid us.
Naturally we're poor and just jealous in the eyes of the Apple consumer
Yup. Nobody complains that a bag of socks is marked up 3x over wholesale.
love is just extroverted narcissism
Supposedly their cost for a serving of soda is five cents, while their smallest soda is sold at $1. That is a 2000% markup. TWO THOUSAND!!!! Should McDonalds instead sell it for 10 cents? Of course not.
Does anybody think that the iSheep will care?
âoeAnd clearly their products are over-priced.â
Apparently you donâ(TM)t understand what you wrote.
when pretty much 3/4 of the parts in their phones are made by other companies. At the same time every American out there accuses every other phone manufacturer of stealing Apple's designs and electronics. Very funny.
Miniaturization and tight integration of components isn't free.
#DeleteFacebook
I agree, but that is included in the BOM cost.
By the way, the CPU, the display and the battery are all more expensive to make on a PC compared to a phone. So is the power supply, the RAM, the storage, and obviously the keyboard. The only thing which is more expensive on the smartphone is the cellular radio, which the PC almost always lacks.
Slashdot's moderation is slow but eventually converges to the correct solution. creimer's pestilent, annoying presence is now correctly where it belongs.
Markups like this, in all kinds of industries, are not uncommon, and quite frankly, are to be expected.
Not in the consumer electronics industry.
PC and TV have much lower margins. Video game consoles are sold at loss to sell games. So did cell phones for most of their existence.
Markups like this are uncommon.
no shit, you're paying for someone else's time and experience - often this is cheaper that you attempting to do it your self. Much like assembling an iPhone, writing an the operating system for it. $1000 odd for deluxe top of the line pocket computer and internet communicator seems pretty reasonable to me..
That is only true when there is a sense by the company that they need to be competitive on price. Apple doesn't feel that way.
And the fact that people buy it despite the high markups proves that they are right.
File under 'M' for 'Manic ranting'
Oh, and $1000 in todays "money" is under one weeks income for the target market of this device, maybe even one or two days worth, and less of course, its pocket change for some people.
Remember the good old days when a TV set cost months worth of income? I personally don't, but I can appreciate it.
Going to bed at 9, skipping the newz and moofie.
Throw in a few of your ebooks to sweeten the deal. A person would have to be crazy to pass up on authentic C.D. Reimer poetry.
nobody is saying companies should not profit from their products,,, but Apple has a long history of demanding an insanely high and greedy profit compared to everybody else
https://www.quora.com/Why-does-Apple-have-a-net-profit-margin-of-20-while-HP-and-Dell-are-around-5?share=1
They are the ones that mixed them and they are now forever entwined.
Apple's taxes explained for idiots IOW for you.
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I charge at least $1500/hour, $6000/hour if you don't know electronics decently.
Change is certain; progress is not obligatory.
So they get all confused that Apple can get away with over-pricing their product and still sell a load, when according to the laws of rational economic self interest everyone should be buying Samsung instead.
To have a right to do a thing is not at all the same as to be right in doing it
Yup. Nobody complains that a bag of socks is marked up 3x over wholesale.
What is the cost of the ingredients for a pint of beer? Pennies. It's mostly water. And they dare to charge five quid for it in a pub!
To have a right to do a thing is not at all the same as to be right in doing it
Of course. But this is still an anomaly in the market.
Market forces should force lower margins in the future. Apple knows it and is trying to profit while it lasts.
Uh, the WHOLE point of a company is to maximize revenues while minimizing expenses. I'm not saying it is right, but that's the nature of the beast (Capitalism).
How MUCH profit is too much? 2x? 5x? 10x? 20x? Where do you draw this arbitrary line and make a stand saying "You are fleecing your customers TOO much?"
Apple has a LONG history of driving hardware expenses down to maximize profits. i.e. When they sold (Floppy) Disk Drives for the Apple 2.
That's material's cost. Do you have any idea how much it costs to produce the software for something as complex as an iphone? How about marketing, support, brick and mortar retail stores, etc. etc. Even at $1k I doubt Apple is turning much of a profit on each unit until you consider what they are making from the app store and other things from iTunes.
Trump is germophobic, like that TV character Monk.
He's also old enough to fully believe in urine as a disinfectant.
a $999 PC has cost subsidized by bundled software. Microsoft drops the price of their OS for OEM's to spread their software more (OEM's paid something like $90, the rest of us paid $150 or more for XP). Not to mention all the crapware that's bundled in. Software vendors pay to put that crapware on.
You don't see near the same level of crap or 3rd party stuff on iOS. Samsung phones have their own crap, so no savings there either.
Even if what you said was true, Apple's $999 PC (say base level Macbook) cost them a lot more to make then their $999 iPhone.
And Apple has big margins on PCs compared to the rest of the industry.
I'm curious what the actual run-down of costs are.
If we assume $300 for BOM, then that's $700 for R&D, Salaries, Prototypes, Offices, etc...
Assuming they sell 200 million of them, we are talking $140 billion. Tim Cook's salary is $2m, then another $8m in incentives, so we'll say $10m. We know that not everyone in Cupertino is making that kind of money, and they don't have 1,400 Tim Cook's on payroll. Where exactly is that line between "covering costs", "making profit", and "Scrooge McDuck greedy"?
Apple could probably charge $400 and still turn an absurd profit just by quantity. At that price, they'd probably sell a lot more than 200 million worldwide.
I can't wait to take my daily shit on his two -1 posts!
You ready good buddy?!?
Sometimes he pops in about an hour. My pucker will be charged and ready to buttpuke all over him though!
Creimey Dumpty Creimey Dumpty Hoy Hoy Hoy!!
Creimey Dumpty Creimey Dumpty Hoy Hoy Hoy!!!
Creimey Dumpty Creimey Dumpty Hoy Hoy Hoy!!!!
Amazing we're well past 24 hours with no new creimer posts AC or otherwise. I think the pain of being at terrible while you're at least at "positive" must have been too much for him. Maybe we can double-butthurt him into coming back so he can prove to us how un-butthurt he was like his last "power play"
We are the champions, my friends!!!!
And we'll keep on fighting...till the end!!!!
We are the champions, We are the champions
No time for losers cause we are the champions...
Of the world!!!!!!!!!!!!!!!!!
CAPCHA: EXPUNGE!
Just like a bag of all human organs, bones, and blood is not equal to a human. We need an OS and firmware too.
A fat man thinks he has a career
knee-deep in intermittent keyboards in the storage closet
His name is Chris
I have an iPhone 7 and I use this unique case right here https://teespring.com/appwindroid
If you want to buy a cool and unique iPhone case like me then have a look at it!
the assembly is worth about $5-10
shipping is probably even cheaper.
Marketing is not done for every iPhone produced, but again, given the quantities Apple sells, ends up pretty low on a per phone cost.