$649 iPhone 5s Costs Apple $199

[Shilohcane]

$649 iPhone 5s Costs Apple $199

 

[pappy53]

$649 iPhone 5s Costs Apple $199

Good ROI.

 

[abazigal]

Yes, because those parts somehow just magically assembled themselves and found their way to the Apple stores and owners' hands without any additional effort on Apple's part. IOS7 didn't cost money. Shipping was free. All of Apple's services run free. The designers just woke up one fine day knowing how to improve the camera, implement a fingerprint scanner or design a 64-bit processor.

Articles like this just miss the point.

 

[Scott7217]

Articles like this just miss the point.

I thought the article was pretty interesting. It gave a breakdown for various components, but it also stated that there were significant costs that Apple never reveals. We should therefore consider that the actual cost would be much higher if we included things like research and marketing.

 

[Busted51]

ok so they sold 9 million units so far, that we know.. each phone hardware cost roughly 200.. so 649-200 = 449? 9 mil = $4,041,000,000. now I'm not sure how subsidies work. but the 4 billion keeps growing daily. and that's for R&D, Shipping.. just think Google bought Motorola for 12 billion. I just looked up Apple's "worth" its over 500 billion.

Posted via The Maxx

 

[Farish]

Article came out in April that Apple is spending 12 million a day in R & D this year.

 

[garublador]

Article came out in April that Apple is spending 12 million a day in R & D this year.

If you assume that Apple spent an average on $300 for each iPhone (which is probably high) then in the first weekend when they sold 9M units they made just over $3B. That's 3/4 of their R&D budget for this year (if they keep that pace) that they made in one weekend of selling the phone. There's no doubt about it, they're making a killing on the iPhone.

If I used iPhones what would bother me isn't that they're making so much on each phone, it's how much they charge for the 32GB and 64GB models. A $200 price increase for a $20 BOM cost increase with little to no R&D cost (they just drop in) is pretty crazy.

 

[pappy53]

There's no doubt about it, they're making a killing on the iPhone.

As is Samsung on the S3 and S4.

I agree about the memory charges.

 

[garublador]

As is Samsung on the S3 and S4.

I agree about the memory charges.

They certainly are. However they don't get to charge the full price for an entire year like Apple does. Samsung has the advantage of making more of their own parts, though. Apparently they're the only two companies doing that right now. Hopefully Motorola will get in on the action here soon. Their new approach to mobile phones seems much better than what they had been doing in the past and I hope that means they do well.

 

[Ry]

Yes, because those parts somehow just magically assembled themselves and found their way to the Apple stores and owners' hands without any additional effort on Apple's part. IOS7 didn't cost money. Shipping was free. All of Apple's services run free. The designers just woke up one fine day knowing how to improve the camera, implement a fingerprint scanner or design a 64-bit processor.

Articles like this just miss the point.

I think these BOM articles coupled with Google's willingness to sell phones like the Nexus 4 at a discount are dangerous. It gets people in the mindset that phones should only cost the sum of it's physical parts. The Moto X was rumored to have Nexus-like pricing.

Plus, people knock on Apple for selling their phone for $600+ when it only costs around $200 in parts while Samsung (S4, Note 2/3) and HTC (One) do the exact same thing. Oh and Apple gets called expensive when they're pretty much on-par with the rest of industry.

 

[Farish]

I remember reading that for every iDevice and OSX device, Apple put aside additional funds for OS development and warranty service.

If you aren't a Mac Owner you wouldn't be aware of this but the last 4 operating system upgrades for iMac has been sold either at 29.99 or 19.99 and when you purchase it once, you can use it on all your compatible devices unlike the Windows Model where it is software purchase for each device.

Just saw on Nasdaq that Apple gross margin is around 36 to 37 percent for last quarter.

 

[madisonjar]

no way can it be that low, but I do know apple has a nice profit margin, thats for sure.

 

[garublador]

I saw this article and thought of these threads:

What Are the Biggest Retail Markups? | Zelkadis Elvi - Yahoo Finance

After that a 225% markup doesn't seem that bad.

 

[frellingfrakker]

I know this is an old thread but I had to comment. Supply and demand set the optimal price for a product, not the cost of production, marketing, etc. Now, if the optimal price is equal to or less than the cost then you probably shouldn't sell it, but if the optimal price is a huge mark up are you going to lower it? Hell no. The goal of a business is to make money. If $649 was "too expensive" then they wouldn't sell tens of millions of them.