I cried all the way to the bank - Liberace
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Apple spends £125 to make the £500 Iphone 4S
MAKER OF OVERPRICED ITHINGS Apple spends just $196 (£125) making an Iphone 4S 16GB smartphone.
Analyst outfit IHS Isuppli has reported that Apple's latest Iphone 4S has a bill of materials (BOM) of just $188 for the Iphone 4S 16GB model. The 32GB and 64GB variants of the Iphone 4S come in at $207 and $245, respectively, with Isuppli citing an $8 manufacturing cost for each device.
With Apple retaining pretty much the same design, the main BOM changes came in the processor chip and the NAND flash memory. The dual-core A5 processor costs just $15 while the Hynix NAND memory is priced at $19.20 per 16GB. Isuppli also claims that Toshiba is a secondary supplier of NAND flash memory to Apple for the Iphone 4S.
Apple is known for its impressive margins and once again the Iphone 4S doesn't disappoint. If Isuppli's figures are accurate then, while Apple might make a measly $3 from an operator subsidised 16GB Iphone 4S, rising to $144 for the 64GB Iphone 4S, once the value of the contract is taken into account, Iphone 4S users will have well and truly paid through the nose for the device.
Even if Apple fanbois want to avoid a life-altering contract with a mobile operator, buying the Iphone directly from Apple doesn't make things much better - if anything it shows just how much cash Apple extracts from its faithful followers.
With Isuppli's figures showing that an Iphone 4S 16GB costs about £125 to build, you have to give a lot of credit to Apple for charging £499 for it and getting away with this. Now, fanbois will quickly point out R&D, marketing and tax all need to be taken into account, but even if you generously round up to £200, that's a 150 per cent margin on every Iphone 4S 16GB model sold. With mark-ups like that you have to wonder then why Apple is limiting orders to two per customer.
On Tuesday Peter Oppenheimer, Apple's CFO said in the firm's financial announcement that he expects Apple to rake in $37bn in the next quarter. With a 150 per cent margin on its most popular product, it's surprising that Oppenheimer even bothers to forecast a revenue ceiling. µ
Tags: Apple
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I think the point of the article is the 4S is made from components from third parties as are all phones out there, yet the other manufacturers who have the same costs charge less of an overhead. A fool and his money are quickly parted. It's worth what someone is willing to pay.
And it's not like the difference between a 7 series and any other car since the internals of the phone are the same as most others, apple wants you to think it's a 7 series which people buy into. It's more like a 7 series body but then you find the engine and all other components that make up the car are the same as everyone else on the road.
That Laurence will ever be bothered to learn anything about consumer electronics before spouting off and ranting about it.
It's pretty common to design CE devices with the assumption that the RRP is going to be 3 x your parts cost. Look at the cost of unlocked (i.e. unsubsidised by the cell operators) phones and they're about the same RRP for higher end devices - the new Samsung ICS phone being a prime example.
Design, development, license costs, import duties, wholesaler margins, retail margins and customer support all add up to a whole lot more than he seems to realise, and oddly enough companies like to make a profit on the devices they sell. The cell companies will be buying at a discount, but they still pay rather more than the contract price (hence it's a subsidised price).
In related news, sources have confirmed that it costs way more to build a BMW 7-series than a Kia Optima. Stay tuned to the Inquirer for more information.
No need to factor in costs for shipping, R&D, marketing and manufacture then?
A typically poor Inquirer article.