iphone Apple Windfall On iPhone 5 As Components Cost $167.50

[Ice_Blue]

Apple (Nasdaq: AAPL), the world's most valuable technology company, should reap another windfall from selling the iPhone 5, because component costs are only around $167.50, engineers at UBM TechInsights reported.

Apple plans to sell the iPhone 5 starting next Friday at prices ranging from $199 to $399. The Cupertino, Calif., may sell as many as 42 million units of the new smartphone by Dec. 31, estimates UBS analyst Steven Milunovich.

Apple's main mobile carriers pay about $450 for every unit they sell.

Teams at engineering groups such as UBM TechInsights and IHS iSuppli, a unit of HIS (NYSE: HIS), a global research company, tear down electronic products and evaluate them for clients.

On a preliminary basis, TechInsights said components for iPhone 5 cost $35 more than for the year-old iPhone 4S. The biggest increase is for the long-term evolution, or LTE, chip from Qualcomm Inc. (Nasdaq: QCOM), which speeds uploading and downloading content. The chip plus circuitry costs $25, or $11 more.

Source

[Lyric]

and people say they are getting ripped off by getting a new iPhone? Apple is only profiting about $35 per phone if you get the base 16GB Model which I will be getting. I have no use for more than 16gb of space on my phone. $199 with a renewal contract for AT&T which I'll already be paying the same price no matter which phone I ever buy, the price won't change.

Lol.

[Chicane-UK Veteran]

And then R&D. And marketing. And paying all the people who designed and built the device. And paying the people who work in the Apple store. And freight costs.

[Denis W. Veteran]

and people say they are getting ripped off by getting a new iPhone? Apple is only profiting about $35 per phone if you get the base 16GB Model which I will be getting.

Lol.

To be fair, you're leaving out the "Apple's main mobile carriers pay about $450 for every unit they sell" part. Add the subsidized cost + 450 = close to the real cost of the phone.

And yes as mentioned above, there are other costs which could knock down the net profit by another hundred or so.

[greenwizard88]

and people say they are getting ripped off by getting a new iPhone? Apple is only profiting about $35 per phone if you get the base 16GB Model which I will be getting. I have no use for more than 16gb of space on my phone. $199 with a renewal contract for AT&T which I'll already be paying the same price no matter which phone I ever buy, the price won't change.

Lol.

Remember AT&T/Verizon pay Apple way more than that for each iPhone sold, and it comes out of the 2-year contract. In reality Apple probably takes home $550 for each 16bg model sold (unlocked price), so it's more like $385 per phone.

[spenser.d]

and people say they are getting ripped off by getting a new iPhone? Apple is only profiting about $35 per phone if you get the base 16GB Model which I will be getting. I have no use for more than 16gb of space on my phone. $199 with a renewal contract for AT&T which I'll already be paying the same price no matter which phone I ever buy, the price won't change.

Lol.

What? Carriers pay $450 per unit on average. The math: 450-167=283x42,000,000=11,886,000,000

$12 billion = a windfall.

[+virtorio MVC]

Hardware R&D, iOS software development, production, packaging, advertising, technical support, warranty services (and whatever else) are not included in these tear downs. It also seems that people only make a big deal with these things when it's about devices from Apple, yet the same also applies to every other product from every other company (or they wouldn't be in business).

[farmeunit]

And then R&D. And marketing. And paying all the people who designed and built the device. And paying the people who work in the Apple store. And freight costs.

And all the money they make off apps . . .

Even if they sold at a loss, they'd still make a ton of money.

[Sandor]

Even if it cost $500 to make each unit including the R&D, shipping etc (which it doesn't), it's still a bit "rich" to see some people trying to suggest it's reasonable to start your price at $700 and work up to $900.

Must need the money to pay for all the lawsuits.

[szo]

I'm sorry no one's forcing anybody to buy their products! Heck, they don't even have any monopoly in any critical industry such as medicine or powerplants. They have a big duty to appease their shareholders and their share price is evidence that their shareholders are really satisfied by their profits. Why would you reduce the price of your products when there is so much demand for it. You would only reduce it when your products weren't selling. This is what RIM did with their playbooks and HP did with their Touchpads.

I also remember why Apple doesn't like reducing their prices. It ruins their resale values and also ruins their premium aspects. Remember even before Apple forced fixed pricing on iPod sales to create the impression that it was a premium product. I can tell you that the iPhone will always have a better resale value than Android phones because firstly there aren't too many models that are built every year and secondly their prices are usually fixed.

[Luis Mazza]

I'm sorry no one's forcing anybody to buy their products! Heck, they don't even have any monopoly in any critical industry such as medicine or powerplants. They have a big duty to appease their shareholders and their share price is evidence that their shareholders are really satisfied by their profits. Why would you reduce the price of your products when there is so much demand for it. You would only reduce it when your products weren't selling. This is what RIM did with their playbooks and HP did with their Touchpads.

I also remember why Apple doesn't like reducing their prices. It ruins their resale values and also ruins their premium aspects. Remember even before Apple forced fixed pricing on iPod sales to create the impression that it was a premium product. I can tell you that iPhone will always have better resale value than Android phones because firstly there aren't too many models that built every year and secondly their prices are usually fixed.

There's always the ones that "no one is forcing... bla..bla, bla".

That's not the point... The point is that you can get bigger, better phones with much less money. This is to alert people that the real big price is marketing. If you want to pay higher to feel good because you're an iSheep, or maybe you have a whole iEcosystem or you're too lazy to try a new phone, than it is ok.

No one is forcing you to accept the fact that Apple's iPhone is as good as the last two generations, only a half inch bigger.

[szo]

There's always the ones that "no one is forcing... bla..bla, bla".

That's not the point... The point is that you can get bigger, better phones with much less money. This is to alert people that the real big price is marketing. If you want to pay higher to feel good because you're an iSheep, or maybe you have a whole iEcosystem or you're too lazy to try a new phone, than it is ok.

No one is forcing you to accept the fact that Apple's iPhone is as good as the last two generations, only a half inch bigger.

You really need to get a life if you think a damn phone justifies your personality. Honestly, I buy the iPhone because it fits in my workflow. I have desktop apps for OS X such as Daylite, Jumsoft Money, Omnifocus and much more. These apps are mac/ios exclusive and they have their companion apps on the iPhone. There are tons of other apps. If I was using Windows, then I would definitely buy the Lumia. With android, I don't have any desktop OS. And furthermore Googles makes all of its apps for iOS too. So I get its cloud apps. I know there are diehard fans that buy products without thinking. But for me the price isn't an issue, because it's a tool for me. The product works as I need it to be and I have all my software.

I swear some of you fanboys really need a wakeup call. You do realize that hundreds of startups develop software for the mac and iOS exclusively. Just look at silicon valley. I can tell you most of the engineers there will be buying the iPhone. There is no specific reason to categorize the people who buy iPhone. It's a good phone and people are really happy with the ecosystem. Just like people are happy with Androids and Lumias.

[+virtorio MVC]

There's always the ones that "no one is forcing... bla..bla, bla".

That's not the point... The point is that you can get bigger, better phones with much less money. This is to alert people that the real big price is marketing. If you want to pay higher to feel good because you're an iSheep, or maybe you have a whole iEcosystem or you're too lazy to try a new phone, than it is ok.

No one is forcing you to accept the fact that Apple's iPhone is as good as the last two generations, only a half inch bigger.

There's always one (well, usually more than one) that brings up the whole "iSheep" term, just because people like something from Apple. What people like and spend their money on isn't really any business of yours.

[Luis Mazza]

You really need to get a life if you think a damn phone justifies your personality. Honestly, I buy the iPhone because it fits in my workflow. I have desktop apps for OS X such as Daylite, Jumsoft Money, Omnifocus and much more. These apps are mac/ios exclusive and they have their companion apps on the iPhone. There are tons of other apps. If I was using Windows, then I would definitely buy the Lumia. With android, I don't have any desktop OS. And furthermore Googles makes all of its apps for iOS too. So I get its cloud apps. I know there are diehard fans that buy products without thinking. But for me the price isn't an issue, because it's a tool for me. The product works as I need it to be and I have all my software.

I swear some of you fanboys really need a wakeup call. You do realize that hundreds of startups develop software for the mac and iOS exclusively. Just look at silicon valley. I can tell you most of the engineers there will be buying the iPhone. There is no specific reason to categorize the people who buy iPhone. It's a good phone and people are really happy with the ecosystem. Just like people are happy with Androids and Lumias.

The jobs intrinsically involved are important, I know that. But can you imagine more jobs with a lower price? But then it would screw Apple's marketing: phones for the poor... ugh.

If you have desktop apps and they talk to your iPhone solely, that is because of the iSheep effect that developers can trust.

I'm not a fanboy... I own a rMBP, which I really love and I also had all previous iPhone models until the 4S, but I got tired of Apple's manners and closeness and now I have a Galaxy Note, which works perfectly with my notebook, be it Windows or Mac OS.

There's always one (well, usually more than one) that bring up the whole "iSheep" term, just because people like something from Apple. What people like and spend their money on isn't really any business of yours.

...nor yours, so what are you discussing here?

[Chicane-UK Veteran]

Hardware R&D, iOS software development, production, packaging, advertising, technical support, warranty services (and whatever else) are not included in these tear downs. It also seems that people only make a big deal with these things when it's about devices from Apple, yet the same also applies to every other product from every other company (or they wouldn't be in business).

Precisely. Really, really irritating.

[Billa]

I wonder what is the cost of a Galaxy S III.

[+jamesyfx Subscriber²]

Apple are a company that make a lot of margin on the stuff they design, everyone knows this. I don't think component cost really tells us anything.

[Luis Mazza]

Precisely. Really, really irritating.

Hardware R&D, iOS software development, production, packaging, advertising, technical support, warranty services (and whatever else) are not included in these tear downs. It also seems that people only make a big deal with these things when it's about devices from Apple, yet the same also applies to every other product from every other company (or they wouldn't be in business).

Precisely. Really, really irritating.

Maybe because Apple is the biggest, most profitable company in the WORLD and it only sells iStuff?

[+virtorio MVC]

Maybe because Apple is the biggest, most profitable company in the WORLD and it only sells iStuff?

What exactly is an "iStuff"? Do their range of computers, software (like Aperture, Final Cut and Logic) and displays fall under that category?

And people have been all over these tear downs long before Apple was in it's current position.

[Luis Mazza]

What exactly is an "iStuff"? Do their range of computers, software (like Aperture, Final Cut and Logic) and displays fall under that category?

And people have been all over these tear downs long before Apple was in it's current position.

The time you're referring to is before the iPhone... That was different because it was more like a football team fight. Now Apple is popular.

The products you mentioned are secondary or even tertiary on Apple's revenues and profit. Their notebooks and tablets are the best, but I don't think the phones are still the best. Actually they only have the iPhone, which is VERY limited compared to the Android's ecosystem and features.

The good times are gone and the iPhone is boring, unless you're an iSheep to worship whatever expensive repetitive phone comes every year.

[szo]

The jobs intrinsically involved are important, I know that. But can you imagine more jobs with a lower price? But then it would screw Apple's marketing: phones for the poor... ugh.

If you have desktop apps and they talk to your iPhone solely, that is because of the iSheep effect that developers can trust.

I'm not a fanboy... I own a rMBP, which I really love and I also had all previous iPhone models until the 4S, but I got tired of Apple's manners and closeness and now I have a Galaxy Note, which works perfectly with my notebook, be it Windows or Mac OS.

...nor yours, so what are you discussing here?

Look I'm not insulting you! Android and WP8 are awesome operating systems! I already use a mac and I do not want to get another mobile OS that don't sync to OS X as well as iCloud. You need to stop using the term iSheep. I'm no gullible dumb user. I studied computer engineering and am heading off to do my masters. I hate the term iSheep. It's just that Apple is a very popular company to nitpick on these days. Specs don't matter to me on mobile phones. The new iPhone is damn fast and the OS is really fluid. I would never buy the Mac Pro. They're not upgradeable and they use older components many times. If I need a workstation, I would build my own. But for me a macbook is powerful enough. And regarding NFC and wireless charging, I really wished that this year's iPhone had NFC. However, you know what, NFC and wireless charging will never catch on until Apple gets in the game. I can tell you that retailers will never setup that many NFC usage scenarios until iPhones get them. Look at where mobile flash ended. Apple never supported it. I'm also planning to get one of the new lumias as an alternative backup phone. I like the OS because it's new and distinct then android or iOS.

Furthermore, regarding Apple's hefty profits per phone and low manufacturing costs. You need to give credit to Tim Cook. He's the man behind the streamlined manufacturing and assembly systems. Apple know's how to be efficient. When was the last time they wasted money on multi billion dollar acquisitions. Their components are really cheap because they spend their billions in 3 years in advance buying a gigantic bulk of them. Also, Stever Jobs knew how to wrangle the service providers such as AT&T and Verizon. He knew how to have the upper hand. It's all about business and being smart.

[dead.cell]

For many who buy Apple products, it's due to their investment. If you have all your music, books, movies, TV shows, apps/games and so forth in one platform, WHY would you jump ship and lose half of that? People go on talking about screen size like as if that should be EVERYONE's number one priority!

Imagine that for a second that someone told you to get rid of your PC and buy a Mac. Well, what about all those applications and games you bought for Windows? "OH BUT THE RESOLUTION ON THE MACS IS SO AWESOME!" Okay, well that may be, but telling someone to ditch a platform they've invested into, just because you have different priorities than someone else is just completely illogical.

This is why I get so damn tired of some of these "iSheep" labels people slap on people for sticking to a platform. What are us PC users? Windows sheep? Come on... People aren't stupid for sticking to a platform that they're happy with or upgrading the hardware that actually runs all the software they bought. Stupid people are the ones who buy things for the wrong reasons.

Also, last time I checked, competition is a good thing.

[+virtorio MVC]

The time you're referring to is before the iPhone... That was different because it was more like a football team fight. Now Apple is popular.

The products you mentioned are secondary or even tertiary on Apple's revenues and profit. Their notebooks and tablets are the best, but I don't think the phones are still the best. Actually they only have the iPhone, which is VERY limited compared to the Android's ecosystem and features.

The good times are gone and the iPhone is boring, unless you're an iSheep to worship whatever expensive repetitive phone comes every year.

Assuming you want to use your phone to make calls, send texts, browse the web, play media and run apps, explain to me how it's limited.

[Luis Mazza]

Ok then... I'll stop calling people iSheep... But it's like witches: I don't believe them, but they do exist.

lol :p

Assuming you want to use your phone to make calls, send texts, browse the web, play media and run apps, explain to me how it's limited.

Assuming you want to use your phone for those tasks, you can get a free Android smartphone with a contract that can do that pretty well.

But I'm sure you don't want it, do ya? :)

[+jamesyfx Subscriber²]

While there are some Apple fanboys out there who can be described as an iSheep, I would hope that the vast majority of people who use Apple equipment do so for the right reasons, and not just because it's the latest thing which is shiny.

Like, I use an iMac because I'm a designer and occasionally a coder. The display is big and bright enough and it's built solidly enough to cope with my heavy-handedness (laptops don't last very long with me. :p Even MacBook Pro's) And I also get some use out of GarageBand sometimes when other people want to use it. So it meets my needs there. Though I don't use an iPhone because I've studied smartphones and have looked at what their features and benefits are, and the iPhones are too limited to what I'd prefer... so I went for a Galaxy Nexus with Android 4.1.

I'd hope that most consumers are like that, buying blind is a terrible way to go about things.