Posted on 07/05/2016 3:24:32 PM PDT by dennisw
The new iPhone 6 and iPhone 6 Plus are very cool. But how much do the devices truly cost to manufacture?
A reader going by the initials P.C. has a question about the new iPhone 6.
"Could you please find out what it actually costs to manufacture the iPhone 6, compared to what we end up shelling out for it?"
So the question ultimately is how much profit are they making?
Best guess: Lots.
The entry-level, 16-gigabyte version of the iPhone 6 starts at $200 plus a two-year contract -- the same price as the iPhone 5s. The larger iPhone 6 Plus starts at $300 with a two-year contract.
But you're still paying for the phone over the life of much of your contract. What you really need to do is look at the cost of a contract-free, or "unlocked," iPhone.
T-Mobile lists the starting price of an unlocked iPhone 6 at $649. The starting price for an unlocked 6 Plus is $749.
That's some serious coin.
As for Apple's expenses, I'll turn to a 2012 report from the research firm UBM TechInsights. It looked at the cost of the made-in-China 16 GB iPhone 5's various components and concluded that Apple shelled out $167.50 to make each of the gadgets. Other reports I've seen place the manufacturing cost closer to $200.
So what's the answer to P.C.'s question? It's probably not far off the mark to figure that Apple is making at least $400 on every iPhone 6 sold.
My feeling about Apple's products is that they're expensive but high quality. You're paying a premium to be in bed with the company.
And, as with any relationship, as long as you go into it with your eyes open, you probably won't be disappointed.
(Excerpt) Read more at latimes.com ...
The doogee X5 gets good reviews at Amazon https://www.amazon.com/s?ie=UTF8&field-keywords=DOOGEE%20X6&index=blended&link_code=qs&sourceid=Mozilla-search&tag=mozilla-20
is akin to comparing a used Kia to a BMW.
*******************
I’ve owned both ... The KIA (hyundai) may not be as polished or have the razor sharp handling but when the warranties are expired YOU’LL BEG FOR THE KIA rather than take the BMW in for yet another service...
Funny I don’t even know what my very expensive Samsung phone is 3-4-5- or whatever G
It had all the stuff and then I let the neighbor kids play with it and ... it is a phone now.
Biggest thing I want to get back is emailing pictures .. I can Text them but Email is Much Better (still don’t know how to take a Text Picture and Save it to my Computer without emailing it)
All of that being said I could probably get along just fine with 3 G
If my sim Card fits and works ... gonna buy a couple batteries and I will be set (I get Rained on and High Humidity turns these expensive ones pink)
The pro model does have 4G
It’s 115.88 free ship and has a 13mp camera... better than the iPhone 6 camera.
iPhones are WAY overpriced! you can buy a half dozen of these for the price of the iPhone 6+
The iPhones are made by the same people and use the same mostly Chinese parts.
The iphones are great, that I concede... but the price is too high.
2G: GSM 850/900/1800/1900MHz; 3G: WCDMA 900/2100MHz; 4G: FDD-LTE Band 1/3/7/20(B1:2100, B3:1800, B7:2600, B20:800MHz)
You are most welcome... the smart phones are great.
Me and a friend stuck them up in various places as web cams...
Works great and I can pull up his greenhouse and he can look at my chicken yard..lol
The wifi range on those tiny phones is amazing!
I can still get wifi from the end of the road to my house... almost half a mile away.
Uh, no. The phone you're pushing has a plastic case. The iPhone 6 was machined out of a single block of Alluminum alloy 7000. The other parts in the iPhone are not necessarily "Chinese" as you claim. For example, the screens are either LG or Samsung with the Gorilla Glass made by Corning in Kentucky. Many of the chips are either Japanese, Taiwanese, or even made in the USA. The processor is manufactured to Apple's own designs by either Samsung or Taiwan Semiconductor Manufacturing Company, Limited. The batteries in Apple iPhones are manufactured in Japan by Sony.
Nor does your phone have a secure OS.
In addition, your phone is NOT assembled by the same assembly lines or the same workers, or to the same stringent engineering standards as Apple's iPhone.
Speaking as an economist, Apple is selling every iPhone it makes for the price it asks to willing buyers. In fact, Apple is still back ordered by about two weeks in meeting demand for the new 4" iPhone SE, which was introduced in February, despite their assembly line running at full speed and a retail price of only $399. Ergo, they are not "over priced."
It is 4g if it is very expensive
Sounds like a lot of Foxcomm workers-jumpers are on suicide watch to git 'er done for the Cupertino foam party boys
I beg to differ.
The IPhone is overpriced!
The cheap phone I detailed is excellent.
And very inexpensive.
Just buy one and try it out.
They are so inexpensive it’s an easy test... then get back to me with a response.
BTW: the iPhone is NOT secure! It’s a sieve of insecurity.
The iPhone is the major target of hackers both governmental and otherwise.
Have 4 Apple devices n like the way the interact but not being a techie a question. If I got a non Apple cell phone would I still be able to have notes, messages, cloud interaction?
I doubt it....... but you can ask swordmaker who is on this thread. He knows everything about Apple products
It is a pet peeve of mine that journalists are so (willfully) economically illiterate regarding sunk costs. If the DoD orders a new airplane design, a huge R&D cost precedes serial production. Once that money is spent it is gone.If the first prototype crashes early in the test program, as happened in the F-14 program for example, it can be said that it cost, in current terms, probably billions of dollars. But whether or not the first plane crashed, the sunk costs are gone, and irrelevant to the cost of the crash. The cost of the crash is the schedule time impact of it and the cost of building one more plane, the marginal cost of the product.
But if the DoD considers developing a new plane to replace the one whose development costs are sunk, DoD will claim that it will buy an infinite number of the new model, to make the huge R&D cost seem negligible - while continuing to divide the R&D cost of the old model by the (obviously finite) number of planes it actually has bought. But the difference in reality is that the R&D costs of the old model are sunk, whereas those of the proposed model are money still in the bank (or, realistically, not yet borrowed).
It is perfectly true, in that context, that the marginal cost to Apple of one more iPhone is a lot less than the accounting cost you describe in your post. OTOH the R&D costs of the next new model of iPhone, while not perhaps yet sunk, are an ongoing cost of staying in business because in a competitive market such as tech, standing pat with the old model is tantamount to going out of business. In tech, R&D costs are, realistically, and expense rather than an investment. Not that the IRS would agree . . .
Whereas in the military plane example, continuous improvement of the old model is SOP and development of new models is, by comparison to tech, sporadic.
Actually, I once did the same cellphone trick you mention.
I had borrowed Fang’s cellphone to go on a trip to pick up
my uncle from the hospital. I’d had to wash his clothes
from the hospital; so went to a Laundromat. - There was a
couple there who became increasingly threatening the longer
I had to stay. I had given the woman a small amount of
money for food. She had been bitching about not being able
to get her “cornrows” done at the salon. - The man kept
trying to grab my cellphone; but I managed to keep it away
from him & then called Fang to tell him the difficulty I
was beginning to have. Then I threw my clothes into a dryer
and drove away; hoping they would be gone when I got back
to pick up the clothes. - Well, no such luck. - When I
returned, somehow the dryer had jarred open & the clothes
weren’t dry. I just snatched the clothes up & beat a hasty
retreat with the still wet clothes in tow. I then called
a friend of my uncle’s & related the problems I was having
She told me to come on out to their house and dry the
clothes. I ended up spending the night and using her clothes
dryer. It was an “experience”. I don’t travel alone any
more & if I absolutely had to in future; I’d carry my
great,great grandfather’s old Smith & Wesson revolver along
with me for an equalizer. In spite of Hitler-y Clinton.
No, these are not true "sunk costs" because they are made in anticipation of making return. I am not referring to all previously made R&D for all iPhones for the past 7 years prior to the release of the iPhone 6, but rather the R&D made solely for the design and creation of the iPhone 6.
It is indeed appropriate to amortize the unique R&D costs for each model into the expenses attributable for each model phone over the life of that phone. If a company does not do this, there is no way to get a true cost accounting of each product it makes to establish a selling price. Under GAAP, one does a best estimate of the number of anticipated units to be manufactured over a specific period of time and amortizes that R&D over those units for that time. Once that is reached, the rest is fully amortized and that expense is no longer accounted for per unit. Apple does not release what they use for their period in which they account for these costs.
Back in 2003, when many companies were adopting this approach, Apple like many others were being forced to charge a fee for "free" updates instead of just including them under GAAP rules. Apple chose to use two years for that GAAP period. That requirement was later dropped under public pressure and the fact the accounting costs to keep track of the fees were greater than the fees.
I really doubt that Apple uses two years to amortize the unique R&D for its products, but it might be as long as the one year product cycle before they bring out the next iteration of that product.
General R&D for new products not associated with a specific product are a general overhead expense of the company. Apple does report their operating expenses in their Annual 10-K, and their overall R&D budget.
One also accounts for a certain amount of company overhead per unit and applies that to cost per unit. Under non-GAAP accounting principles, smaller companies can just lump everything together and use a general percentage.
This idea that the "cost" of product is only the raw components dumped into a box is far too simplistic.
By the way, "sunk cost" generally refers to costs spent on specific projects that have failed and the money spent trying to get them off the ground will never be recovered, not ones that go on to be successes and DO make money to pay back their initial investments. That money spent on R&D to develop those successful projects IS recoverable and then some in the form of profits over the life of the successful products that were developed with the money spent getting it off the ground. That money is CERTAINLY recoverable and not sunk. One their of the origin of the term "sunk cost" came from the oil industry where nine times out of ten wildcatters drilled dry wells and sunk their investments into the ground for no return, money ill spent for no return; a dry hole in the ground where they sank their money. Another popular theory on the origin of the term is that it came from investors who would put their money in shipping a cargo to the orient in hopes of a more valuable cargo being returned during the age of sail when the ships did not come back having "sunk" on the journey taking their investment with it.
You really do not know what you are talking about. The iPhone is far more secure than any Android phone. The government had to pay a huge amount of money to break into an older iPhone 5 that had an older Processor IC, the A7, that was not what they run today, Apple is using A9 and A10 with the Secure Enclave since the introduction of iOS 8. . . the modern iPhones are encrypted automatically to 255bit AES standard and are unbreakable, even by the FBI unless you have the user's passcode. To decrypt the data on an iPhone it would take 5.62 undecillion years using the fastest supercomputer we now have. There are close to ZERO malware for the iOS compared to over 4 MILLION malware in the wild for Android including some that allow complete access to the OS and the data. Just yesterday:
This Android malware has infected 85 million devices and makes its creators $300,000 a month
Then there is this:
iPhone Vs Android Security Compared In Light Of Apple-FBI Case
“If a person walks into a Best Buy and walks out with an iPhone, it’s encrypted by default. If they walk out with an Android phone, it’s largely vulnerable to surveillance,” said Christopher Soghoian, the principal technologist at the American Civil Liberties Union.
So much for your ignorant claims.
Ha! THAT Oreo is actually BIG as Oreo’s go. The ones I’m
thinking of are round, very small and NOT double stuffed!
The old one Fang had back before everybody and his brother
had them was as easy to talk in as a regular phone.
I’m not modern; but there are some modern inventions I do
like. Zippers. Electric Stoves. Dishwashers. Electric
Refrigerators.
I also doubt Hitler-y is really all that savvy about
e-mails. Billy Bob wasn’t. That’s why they have peasants
like us for servants. Peasants are by and large smarter than
the Arkansas Grifters.
I'm still using this.
Well, now. I thought we had been early to the parade; but I
see that YOU actually almost got one of the earliest ones
that was made from hand-hewn logs. THAT one really does
leave no room for passengers.
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