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Apple spends £125 to make the £500 Iphone 4S

Fanbois will be suitably impressed
Thu Oct 20 2011, 11:22

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


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