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The Cost of Building the New iPhone 5S and 5C

By - Source: via AllThingsD | B 20 comments

Apple's iPhone 5S and 5C face the teardown treatment for a second time.

When Apple first announced the iPhone 5C a few weeks ago, there was a lot of shock at the price. Sure, the on-contract pricing isn't bad, but the up-front cost of the phone isn't exactly economical at $549. Especially for a phone that everyone thought would be a budget or entry-level iPhone. Yes, it seems the 'C' in 5C most certainly stands for 'color' and not 'cheap,' but how much does it cost Apple to build an iPhone 5C? Or the iPhone 5S (which starts at $649) for that matter?

 

According to a teardown analysis from IHS and obtained by AllThingsD, the cost of components and manufacturing for the iPhone 5C is from $173 to $183, depending on capacity and including $7 for assembly. The iPhone 5S costs at least $199 (for the 16 GB model) for components and assembly. What's more, IHS says that aside from the fingerprint sensor, A7 processor and new memory chips in the iPhone 5S, they're essentially the same phone. Of course, this is just the cost for components and assembly, and Apple has to factor other costs into the production of the iPhone, including shipping and marketing.

 

Apple released the iPhone 5S and 5C last Friday following a September 10 unveiling. The company on Monday revealed that it had sold nine million iPhones over the weekend, though the company didn't offer any sort of breakdown of which phone sold more.

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Top Comments
  • 20 Hide
    sketysh , September 25, 2013 5:05 PM
    Interesting. Now make a similar article for some Android phones.
  • 19 Hide
    andystanley , September 25, 2013 5:14 PM
    Hmmmm.....Are they making any money from these phones? Seems like awfully slim profit margins ;) 
  • 13 Hide
    none12345 , September 25, 2013 6:32 PM
    Speaking from the standpoint of a small business owner. On an item that sells for $500, my cost will be somewhere between $410 and $440, meaning profit of 60-90, before overhead, rent, employees, power, etc, etc.

    Having a profit margin of $450 on an item that sells for $650 would be absolutely godly. But, id feel pretty dirty making that kinda profit margin on items in that price range.
Other Comments
  • 20 Hide
    sketysh , September 25, 2013 5:05 PM
    Interesting. Now make a similar article for some Android phones.
  • 19 Hide
    andystanley , September 25, 2013 5:14 PM
    Hmmmm.....Are they making any money from these phones? Seems like awfully slim profit margins ;) 
  • -7 Hide
    Blazer1985 , September 25, 2013 5:51 PM
    Not exact. People let Apple do this.
    SHUT UP AND TAKE MY MONEY! :-)
  • 5 Hide
    falcompsx , September 25, 2013 5:57 PM
    Why wouldn't Apple do what they are doing? they make massive profits, and sell in massive quantities. As long as people keep buying it, they will keep doing it. Apple isn't doing anyone any favors, nor should they, its simple business. If the majority of people didnt like how much margin Apple charges, and didnt buy the phones, the would be forced to either lower prices, or add enough features to make it worth the cost.
  • 0 Hide
    Shankovich , September 25, 2013 6:26 PM
    How about all the R&D that went into it, paying all the engineers, programmers, etc. Every phone is overpriced, but don't forget how expensive it is to pay the designers and analysts at every level.
  • 13 Hide
    none12345 , September 25, 2013 6:32 PM
    Speaking from the standpoint of a small business owner. On an item that sells for $500, my cost will be somewhere between $410 and $440, meaning profit of 60-90, before overhead, rent, employees, power, etc, etc.

    Having a profit margin of $450 on an item that sells for $650 would be absolutely godly. But, id feel pretty dirty making that kinda profit margin on items in that price range.
  • 2 Hide
    Cons29 , September 25, 2013 8:14 PM
    ok, let us factor in R&D, other overhead cost, which is valid.

    i do have one question though, if a higher storage cost like a freakin $10, then why sell it for an additional $100??? that's why i like android more, most have expansion slots, you're not forced to buy the higher capacity, not to mention you can use external drives/flash drives
  • 0 Hide
    tomfreak , September 25, 2013 8:17 PM
    this is the reason why I only buy low cost budget phone that is below $300.

    I think I now gonna go $200 budget for my next phone. Smartphone can be obtain for $150 already. So $200 budget seems right
  • 9 Hide
    hasten , September 25, 2013 9:14 PM
    I'm confused. The Apple fanboys keep throwing around R&D, but when you release the exact same product in a less expensive housing the R&D costs are nearly $0. Unless of course you believe the "Plastic Perfected" marketing (in which case you are a fool) - on that note you can add in the astronomical amount of marketing expense to keep the distortion field active.
  • 0 Hide
    abbadon_34 , September 26, 2013 3:46 AM
    Don't confuse the 2-years CONTRACT price (~$200) with the NO CONTRACT price (~$600).
  • 2 Hide
    fiduke , September 26, 2013 7:23 AM
    Anyone who pulls up an Apple quarterly report can see their profit maring per phone pretty fast. Take total phone profit, divide by units sold, and voila - there it is. I haven't looked in a couple quarters but last I checked it was about $350 per unit. So that's about $200 for actual materials and labor then another $100 for everything else including marketing, R&D, and much much more. So basically they are doing very well for themselves.
  • 0 Hide
    fat_panda , September 26, 2013 10:09 AM
    SGS4 costs $220 to make, and is sold for $769.99...it's a business thing, not just Apple.
  • 0 Hide
    the1kingbob , September 26, 2013 10:10 AM
    Why is this back at the top of the list?
  • 0 Hide
    jaber2 , September 26, 2013 10:16 AM
    Apple sells these at loss, they make their money selling plush dolls resembling the iPhone
  • 0 Hide
    Oki Buri , September 26, 2013 10:50 AM
    Bunch of Idealists. It's all about business even if you reverse apple with other companies. It would all be the same. The law of supply and demand. If you have demand even if artificial, why would you sell at a lower margin? The company needs the added cash to be on top. It is just a game believe it or not.

    Grow up and don't think too much about being fanboys/gays. Buy what you need at the price you deem appropriate. Nobody is forcing you to buy anything from whichever companies. It is not like commodities wherein price manipulation will sabotage the economy.
  • -1 Hide
    rocker19943 , September 26, 2013 11:50 AM
    cheap shit for high price
  • -1 Hide
    Claudio Salinas , September 26, 2013 1:11 PM
    Please guys do not forget R&D this cost developed for months before starting to be transfer to the final product and in this kind of companies most of the times represent most of the cost.
  • -1 Hide
    Claudio Salinas , September 26, 2013 1:13 PM
    Software included is pure R&D
  • -1 Hide
    jimmysmitty , September 26, 2013 9:58 PM
    Quote:
    Speaking from the standpoint of a small business owner. On an item that sells for $500, my cost will be somewhere between $410 and $440, meaning profit of 60-90, before overhead, rent, employees, power, etc, etc.

    Having a profit margin of $450 on an item that sells for $650 would be absolutely godly. But, id feel pretty dirty making that kinda profit margin on items in that price range.


    How else do you expect Apple to make billions of dollars to save away? Besides cutting deep into app developers pockets that is.

  • 0 Hide
    EBT Technologies , September 27, 2013 7:42 AM
    Apple have captured the market but they are not all that innovative, compare APPLE to ASUS (Asus with their innovation is a huge difference from apple.)