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iPhone X Costs Apple $370 in Materials: IHS Markit (ihsmarkit.com)

Posted by msmash on from the fat-profit-margin dept.

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.

5 of 120 comments (clear)

  1. BOM cost is totally all a product costs to make... by Anonymous Coward · · Score: 5, Interesting

    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.

  2. Newsflash: Companies sell things to make a profit! by UnknownSoldier · · Score: 4, Interesting

    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.

  3. Re:It's almost as if by tlhIngan · · Score: 3, Interesting

    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!

    Plus, Apple has to do demand-management. The iPhone X is neat, it's got a lot of neat stuff in it, but Apple has to price it right because they can't make enough to satisfy demand. Sure they could sell it at $800, but demand will outstrip supply so much that everyone will complain about it being constantly out of stock.

    Add in scalpers and the price might very well be $1500.

    Apple can only make so many of the things - there are parts that are just hard to make (e.g., the screen, the 3D camera) and Samsung cannot produce any more than they're already producing. Samsung might be able to revert one of their other lines for iPhone X screen production instead of Galaxy S/Note 8 production, but that only adds a fractional more amount of screens to the market. Ditto the 3D camera which is apparently the bottleneck at the moment.

    There in lies the challenge - where do you price it so demand is high, but not too high (or you send people to the competition and leave money to scalpers), but it's also not so high that once you satisfy initial demand that you're forced to drop the price.

  4. The Two Locksmiths by JBMcB · · Score: 4, Interesting

    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.
  5. Re:That's so Jewish by fred6666 · · Score: 3, Interesting

    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.