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iPhone 5 Costs $199 in Parts; Sells for $649 Off-contract

By - Source: IHS | B 85 comments

Apple is spending more money to build the iPhone 5.

According to a preliminary teardown analysis provided by IHS, the estimated hardware cost of the 16 GB version of the iPhone 5 is $199, which is up from an estimated $188 for the iPhone 4S in October 2011. If $8 of assembly cost is included, the 16 GB iPhone 5 may cost Apple about $207, the 32 GB version $217 and the 64 GB model $238.

The cost not included in this calculation are secondary items such as R&D, shipping as well as PR and marketing. However, given the fact that Apple has non-contract prices of $649, $749 and $849 for its iPhones, there is still a very comfortable profit margin this device.

IHS said that the increased cost for Apple is due to more expensive display and wireless components, while the price for NAND Flash has fallen considerably. In the base model, the most expensive part is the display with a cost of $44 and the wireless section with a cost of about $34. The 16 GB flash chip is among the cheaper parts with just $10.40 cost.

 

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  • 34 Hide
    lahawzel , September 19, 2012 6:27 PM
    Only in mobile devices does $30 of extra NAND sell for a $200 premium.
  • 26 Hide
    Johmama , September 19, 2012 6:29 PM
    Since this is Tom's, I expect a thousand anti-Apple comments here, but I'd like to try to get a mature and neutral analysis on this article.

    Apple company/logo aside, if any company was doing this stuff, I would be very upset with them. I can understand having to recoup marketing and research and stuff, but a 300+% markup!? There is no way they aren't just upping the price for pure profits, and the sad part is: they'll still sell an insane amount of them. Corporate greed like this sickens me.

    So according to my neutral analysis of this article: Apple is a greedy company that sells underpowered devices for ridiculous prices. It's always nice to take a step back, check to see if your convictions hold any ground, and be re-assured.
  • 24 Hide
    Anonymous , September 19, 2012 6:26 PM
    TOTALLY WORTH IT!

    (can I thumbs down my own post?)
Other Comments
  • 24 Hide
    Anonymous , September 19, 2012 6:26 PM
    TOTALLY WORTH IT!

    (can I thumbs down my own post?)
  • 34 Hide
    lahawzel , September 19, 2012 6:27 PM
    Only in mobile devices does $30 of extra NAND sell for a $200 premium.
  • 26 Hide
    Johmama , September 19, 2012 6:29 PM
    Since this is Tom's, I expect a thousand anti-Apple comments here, but I'd like to try to get a mature and neutral analysis on this article.

    Apple company/logo aside, if any company was doing this stuff, I would be very upset with them. I can understand having to recoup marketing and research and stuff, but a 300+% markup!? There is no way they aren't just upping the price for pure profits, and the sad part is: they'll still sell an insane amount of them. Corporate greed like this sickens me.

    So according to my neutral analysis of this article: Apple is a greedy company that sells underpowered devices for ridiculous prices. It's always nice to take a step back, check to see if your convictions hold any ground, and be re-assured.
  • -9 Hide
    Tab54o , September 19, 2012 6:31 PM
    They buy this stuff in HUGE quantities surely the volume pricing is MUCH lower than this.
  • 20 Hide
    DrinkTray , September 19, 2012 6:35 PM
    A 326% mark up for Crapple? Those are some loyal customers. At least the Foxconn employees are well provided for...
  • 11 Hide
    chomlee , September 19, 2012 6:40 PM
    I like how they are charging a $100 and $200 premium for the upgraded memory when the costs have dropped considerably. Apple is only doing this because "They Can"...... Greed Bastards. I guess that is why there stock is breaking $700.
  • 20 Hide
    cozalp , September 19, 2012 6:41 PM
    JohmamaApple is a greedy company that sells underpowered devices for ridiculous prices.


    Who is to blame for this? Buying customer or the company? Being greedy is in the nature of any company. They take money from anyone who is willingly give it. People should be more aware of the choices and what suits them best.
  • 11 Hide
    chomlee , September 19, 2012 6:43 PM
    There is already reports of Iphone5s selling for $1100 on ebay. Obviously some rich person that "has to have it NOW".
  • 3 Hide
    victorious 3930k , September 19, 2012 6:46 PM
    Look at the markup. You already know it's apple.
  • 14 Hide
    wannabepro , September 19, 2012 6:47 PM
    jrm59TOTALLY WORTH IT! (can I thumbs down my own post?)

    I'll do it for you!
  • 17 Hide
    wildkitten , September 19, 2012 6:51 PM
    JohmamaSince this is Tom's, I expect a thousand anti-Apple comments here, but I'd like to try to get a mature and neutral analysis on this article.Apple company/logo aside, if any company was doing this stuff, I would be very upset with them. I can understand having to recoup marketing and research and stuff, but a 300+% markup!? There is no way they aren't just upping the price for pure profits, and the sad part is: they'll still sell an insane amount of them. Corporate greed like this sickens me.So according to my neutral analysis of this article: Apple is a greedy company that sells underpowered devices for ridiculous prices. It's always nice to take a step back, check to see if your convictions hold any ground, and be re-assured.

    The red flag in your comment is the fact you said you were doing a "neutral" analysis twice, yet there was nothing neutral about it, much less mature.

    I am no Apple fan myself, but you make the comment "corporate greed" making your bias obvious from the beginning. That right there means you are not coming from this in any neutral way. You also do not even try to make any sort of educated estimate on what Apple's R&D and marketing costs are. That means your "neutral" analysis is not mature.

    Are they upping the price for pure profit? Of course they are, THEY ARE IN BUSINESS. Do you insist only making enough in salary to pay your bills? Do you have any left over to put in savings or to make a personal profit? If so, your personal greed sickens me.

    The fact is, no company will ever be successful by charging more than the market can bear. If their product is too expensive, it simply will not sell. If someone else wants to spend their money on the product, that is their business. How someone spends their money is no business of yours. You also ignore the fact that this is non contract pricing. Pricing for non contract phones will always be on the high side to make it attractive to be on a contract. Your "neutral" analysis provides no educated estimates of just how much of a percentage of iPhones will actually be sold off contract.

    Not to mention have you ever seen how much an Android phone costs off contract? $649....
    http://smartphones.techcrunch.com/q/197/4792/How-much-does-the-Motorola-DROID-RAZR-MAXX-smartphone-cost-without-a-two-year-contract
    Hm, that seems to be the exact same price since the Razr Maxx comes with a base 16GB storage.

    The fact is, the off contract prices for the iPhone 5 is nothing out of the norm for high end cell phones sold off contract.
  • 5 Hide
    Anonymous , September 19, 2012 6:54 PM
    I'd like to see how much VzW, Sprint, etc. pay for the phones. I would guess a very small percentage sell for the retail prices listed in the article.
  • 9 Hide
    memadmax , September 19, 2012 6:55 PM
    If you don't like the absurd profit scalping, frivolous lawsuits, crap OS, locked down hardware/OS, cheesy garbageware on iTunes, etc etc...
    Then do what I do:

    Don't buy the damn thing...
  • 14 Hide
    _kardon_ , September 19, 2012 6:57 PM
    I won't deny that this markup is high, but the Nexus One was $175 to build and retailed for $529 http://www.pcmag.com/article2/0,2817,2357924,00.asp

    The Ipad is more reasonable:
    http://www.isuppli.com/Teardowns/News/Pages/New-iPad-32-GB-4G-Carries-364-35-Bill-of-Materials.aspx

    So is the Nokia 900:
    http://wmpoweruser.com/ihs-isuppli-tears-down-the-nokia-lumia-900-reveals-209-component-cost/#

    Before you start hating one company more than others you should look up the costs of these builds.
    http://www.isuppli.com/Pages/Home.aspx (use their search function)

    Also I would like to state I hate all corporations about equally. :) 

  • -9 Hide
    memadmax , September 19, 2012 7:00 PM
    I wonder where the so called 99%'rs are at on this. Banks don't even begin to have as much of a profit margin as apple does even on their wildest days...
    And don't give me that crap about "ur comparing a computer company to a bank!"
    Wrong! MOFO!
    It's two businesses... both providing a service that you pay for!
    Only one is screwing you over at a higher percentage than the other...
    Think about it... when you buy a house with a LOAN, from a bank, you get to do whatever you want with it right? Add another bathroom, paint a different color, etc etc...
    You can do that with an iPhone right? WRONG MOFO!
    Ur screwed and can't do anything with it! And if you do, you risk getting thrown in JAIL!
    Grab ur ankles MOFO!
  • 4 Hide
    techcurious , September 19, 2012 7:03 PM
    Seeing this makes me sad.. cause it means Apple will have even more money to pay for more and better lawyers than ever and continue to bully their competitors! :( 
    If there's any justice in the world, HTC, Samsung and others will succeed in Suing Apple over the LTE patents and get $200 per phone in damages! I'm taking a roll of pennies down to the wishing well.. who's with me??
  • 0 Hide
    classzero , September 19, 2012 7:06 PM
    Ok, I'll bite, let's see what a samsung is doing.
    http://www.s3forums.com/forum/galaxy-s3-news/331-t-samsung-galaxy-s-iii-up-preorder-now-also-off-contract-price-only-549-99-a.html
    Oh no, the same model! Thumb me down all you want but BOTH Samsung and Apple do this!
  • 3 Hide
    wildkitten , September 19, 2012 7:09 PM
    memadmaxI wonder where the so called 99%'rs are at on this. Banks don't even begin to have as much of a profit margin as apple does even on their wildest days...And don't give me that crap about "ur comparing a computer company to a bank!"Wrong! MOFO!It's two businesses... both providing a service that you pay for!Only one is screwing you over at a higher percentage than the other...Think about it... when you buy a house with a LOAN, from a bank, you get to do whatever you want with it right? Add another bathroom, paint a different color, etc etc...You can do that with an iPhone right? WRONG MOFO!Ur screwed and can't do anything with it! And if you do, you risk getting thrown in JAIL!Grab ur ankles MOFO!

    And exactly what can you do with your iPhone that will get you thrown in jail, aside from phoning in a bomb threat or some other activity like it? You do realize it's not illegal to jailbreak an iPhone right? Will it void your warranty? Likely so, but guess what, Android phone makers do the same to people rooting an Android phone.

    And no one is screwing anyone over. Are you forced to buy an iPhone? No, you aren't, therefore you aren't being screwed over. What someone sells a product for and what someone else chooses to spend their money on does not affect you. And if you choose to buy one, then you have taken the responsibility to choose to buy it so haven't been screwed over.
  • 6 Hide
    bllue , September 19, 2012 7:12 PM
    This is why we can't have nice things.
  • 6 Hide
    exar333 , September 19, 2012 7:12 PM
    That doesn't include R&@ costs or software dev/maintenance costs either. Pretty childish 'analysis' and conclusions here IMHO.
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