The new iPhone 5 carries a bill of materials (BOM) of US$199 for the low-end model with 16GB of NAND flash memory, according to a preliminary virtual teardown conducted by the IHS iSuppli Teardown Analysis Service. When the US$8 manufacturing cost is added in, the cost to produce the iPhone 5 rises to US$207. For the 32GB version of the iPhone 5, the BOM cost increases to US$209, while 64GB version is estimated at US$230.
Apple will reportedly sell unlocked versions of the iPhone 5 for $649 (16GB); $749 (32GB); and $849 (64GB). In other words, Apple is selling unlocked iPhone 5s for more than three times the actual manufacturing costs.
Even more than 3 times if you consider that in Europe the iPhone is sold using the US$1 = 1 Euro system.
But, since in reality 1 Euro = 1.3 USD, then the 649 Euros it costs in the EU is actually 847USD, the 749 Euros is 978USD and finally 849 Euros is 1108 USD.
What a deal!
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Why are people 'dumb' to spend their own money on a product that they feel adds value to their lifestyle?
Besides, this cost ignores things like design, r&d, advertising, support or any other costs associated with manufacturing a product and running a business. To be perfectly honest, I'd have thought a three fold mark up is fairly typical.
Ever considered the cost of making the set of clothes you're currently wearing? It's probably a fraction of what you paid for them.
Selling items for 3x cost is SOP in the manufacturing/retail world. There is nothing shocking or weird about that fact. I have made products in China and done the same thing. You have to leave room for other costs such as marketing, distributors and retailer margins. Apple is a little different because they have their own stores, but they have to pay for the overhead of those stores etc. I bet Apple makes about $150-200 per phone which is about a 100% markup which is what you like to shoot for when making and selling products.
Apple really makes a killing on the apps and other licensing deals for the electronics to support their products in 3rd Party devices like iPod clocks and speakers etc. That is tightly controlled and is a #%&*$# to deal with plus not cheap. They also changed the 30pin connector on this new phone, which I am sure was a direct result of counterfeit connectors out there also made in China. The GDP of China will now shrink a bit until they find a way to make the new connector. LOL.
Doesn't Apple get a kickback from the cell phone providers (Sprint, AT&T, Verizon..) So there may be significant downstream revenue for them based on that. I mean..if you look at the Best Buy circulars, they have phones for sale for like $100, but if you don't sign up for the unlimited data plan 2 year lock in contract you would have to pay $799 or something..
I love my iPad and would probably consider an iPhone at some point. Right now Spring has 4G service on my HTC EVO and I don't think I can get 4G speed on Sprint with their iPhone yet. So no reason to change. I love tethering to my 4G EVO and using my laptop using that signal. It is a million times faster than our wireless LAN at our office.
BTW, Samsung is already taking advantage of the release to show off it's S3 model:
And I heard they are just waiting for the iPhone5 to hit the streets to file yet another lawsuit against Apple.
Maybe that's why they are so expensive! To pay for the Lawyers!
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That's a pretty disingenious way to measure worth used in that blog. One kilo of used paper has a "bill of materials" of like four cent and 200 gram newspaper cost me two bucks. Most cancer drugs cost cents at best to manufacture.
If you leave out costs for research, engineering and patents, most modern products seem way overpriced. Looks to me, plenty people see value for money in their iphones.
Nothing wrong about a company making money ? Sometimes the end price is even 10x the production costs, and it still is payable.
If you had a company, and people like your products, and would be ready pay 20 Dollars for it, why should you sell it for 3 or 4 (production cost + a bit of revenue) - especially if it is a lifestyle product ? Mileage may vary in things medical ethically, but just of all those companies have an even higher than 10x margin ..
I don't particularly like Apple products, and would definitely never ever buy something with an "i" in front of its name.
Now that being said (written?), I do feel that Apple should charge as much for their products as they like; if people are happily dishing out that much for a lifestyle product, why not cash in on that?!
But it's good to know the real production costs of a cellphone when you want to haggle with your cell phone providers (I don't know about the ones in the US, but here some providers "subsidize" (some of) the cost for a new cell in return for a 2-year plan).
I'll wait for the next model Samsung Galaxy, as I am still more than happy with my HTC.
Why men throw their lives away attacking an armed Witcher... I'll never know. Something wrong with my face?
Actually its a scam run between all cell phone providers and cell phone makers. The phone makers sell the phone (not just apple, samsung does this too, try to buy an S3 without a contract to see the real price) to the providers for 500-600. The providers then turn around and tell you, we will subsidize your purchase with a 2 year contract. If you break said contract, you owe us the remaining subsidized portion or around $250 (AT&T Charges this amount). So in the end, because of this collusion, the consumer gets screwed. There is no real competition to drive prices down on the phones, its all based on when the next big thing comes out, and how the provider can attract subscribers. Samsung, Motorola, Nokia and Apple all make their huge chunk of money. Its a crappy system.
#3647501 - 09/20/1212:21 PMRe: How much does an iPhone 5 cost to make?
[Re: Catfish]
Joined: Apr 2001 Posts: 121,491PanzerMeyer
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PanzerMeyer
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Originally Posted By: Catfish
If you had a company, and people like your products, and would be ready pay 20 Dollars for it, why should you sell it for 3 or 4 (production cost + a bit of revenue) - especially if it is a lifestyle product ?
Uh why? Because you can. Market demand drives price more than anything else. Besides, if the business is a publicly traded company, it makes complete sense to sell the products for as much as the market demand would allow since there is the stock price and investors to take into consideration.
“Whoever fights monsters should see to it that in the process he does not become a monster. And if you gaze long enough into an abyss, the abyss will gaze back into you.”
Actually its a scam run between all cell phone providers and cell phone makers. The phone makers sell the phone (not just apple, samsung does this too, try to buy an S3 without a contract to see the real price) to the providers for 500-600. The providers then turn around and tell you, we will subsidize your purchase with a 2 year contract. If you break said contract, you owe us the remaining subsidized portion or around $250 (AT&T Charges this amount). So in the end, because of this collusion, the consumer gets screwed. There is no real competition to drive prices down on the phones, its all based on when the next big thing comes out, and how the provider can attract subscribers. Samsung, Motorola, Nokia and Apple all make their huge chunk of money. Its a crappy system.
I don't understand where the 'scam' is in all this? I've previously compared the cost of buying a phone outright and paying for network access against the subsidised price plus contract, the totals are not dissimilar. You probably can do it cheaper buying the phone up front, but only if you chose a network package with very limited calls and data.
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What annoys me is you are buying that little apple symbol on the back, not the lacking features inside the phone. There are far, far better phones out there that do way more a lot better and are cheaper but they don't have that little apple symbol...
Apple know other manufacturers do it better that's why they sued recently.
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#3647569 - 09/20/1202:56 PMRe: How much does an iPhone 5 cost to make?
[Re: Mace71]
Joined: Apr 2001 Posts: 121,491PanzerMeyer
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Originally Posted By: MaceUK33
What annoys me is you are buying that little apple symbol on the back, not the lacking features inside the phone. There are far, far better phones out there that do way more a lot better and are cheaper but they don't have that little apple symbol...
Apple know other manufacturers do it better that's why they sued recently.
I don't think anyone claimed that most consumers are intelligent. A lot of consumer behavior is irrational and the advertisers know this.
Last edited by PanzerMeyer; 09/20/1202:57 PM.
“Whoever fights monsters should see to it that in the process he does not become a monster. And if you gaze long enough into an abyss, the abyss will gaze back into you.”
