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iPhone X Costs Apple $370 in Materials: IHS Markit ( 120

Engineers at marketing research firm IHS Markit cracked open the base version iPhone X, which Apple is selling at $999, this week. After preliminary physical dissection, the firm estimated that the iPhone X carries a bill of materials of $370. From their findings: With a starting price of $999, the iPhone X is $50 more than the previous most expensive iPhone, the 8 Plus 256 GB. As another point of comparison, Samsung's Galaxy S8 with 64 GB of NAND memory has a BOM of $302 and retails at around $720. "Typically, Apple utilizes a staggered pricing strategy between various models to give consumers a tradeoff between larger and smaller displays and standard and high-density storage," said Wayne Lam, principal analyst for mobile devices and networks at IHS Markit. "With the iPhone X, however, Apple appears to have set an aspirational starting price that suggests its flagship is intended for an even more premium class of smartphones." The teardown of the iPhone X revealed that its IR camera is supplied by Sony/Foxconn while the silicon is provided by ST Microelectronics. The flood illuminator is an IR emitter from Texas Instruments that's assembled on top of an application-specific integrated circuit (ASIC) and single-photon avalanche diode (SPAD) detector from ST Microelectronics. Finisar and Philips manufacture the dot projector. IHS Markit puts the rollup BOM cost for the TrueDepth sensor cluster at $16.70.
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iPhone X Costs Apple $370 in Materials: IHS Markit

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  • by Anonymous Coward on Thursday November 09, 2017 @03:41PM (#55521023)

    When he arrives at the customer's house, he inspects the faucet, installs a new rubber gasket, and gives the customer a bill for $100.

    "This is outrageous," says the customer. "I demand an itemized bill."

    The plumber quickly writes up an itemized bill:

    Rubber Gasket: $0.50

    Knowing where to put it: $99.50

    • by PPH ( 736903 ) on Thursday November 09, 2017 @03:48PM (#55521075)

      That's the essence of all economics. If you trace the components back to their source, its a few cents worth of sand, aluminum oxide and other ores and petroleum. Everything else is labor, licensing fees and debt service.

      And taxes. So one could accurately say that an iPhone X costs $1000. Paid to Apple Jersey. Net profit for Apple USA: $0.

      • Any business that expects to survive, let alone thrive, in a competitive marketplace has to charge enough for whay they sell to cover a plethora of costs from vehicles to employee compensation to insurance... costs that aren't always obvious to folks who think a hundred dollar service call is highway robbery.

        These cost to make it versus sale price comparisons are useless.

      • Taxes? What percentage of that $999 goes to taxes?

        • Knowing Apple, probably somewhere in the vicinity of 0.01%, to Ireland.

        • by I75BJC ( 4590021 )
          Property tax Business part of Social Security tax Tax on consumable items Tax on utilities Tax on capital items Tax on stock transfers and sales Tax on retirement accounts Tax on taxes Lots of taxes once you understand the American Syatem. Most Taxes in the USA are hidden taxes.
    • Dan Ariely, an economist, also has a similar story [] to share:

      As I mention in the video, what's really interesting is that this locksmith was penalized for getting better at his profession. He was tipped better when he was an apprentice and it took him longer to pick a lock, even though he would often break the lock! Now that it takes him only a moment, his customers complain that he is overcharging and they don't tip him. What this reveals is that consumers don't value goods and services solely by their utility, benefit from the service, but also a sense of fairness relating to how much effort was exerted.

      Emphasis is mine.

    • Rubber Gasket: $0.50
      Knowing where to put it: $4.50
      Having the experience to actually change the rubber gasket without fucking everything up and without making a leaky mess: $95.00

    • rubber gasket

      In my limited experience, they are usually called washers or o-rings. Gaskets usually don't involve moving parts so rarely fail.

    • /Oblg. X marks the spot, aka Handyman's Invoice []

    • by Thruen ( 753567 )
      Wish I had mod points. I work at a manufacturing company, our cost of materials is on average around 15%. We would sell iPhones for almost $2,500, and that would be the cost to Apple. Folks are kidding themselves if they think Apple ever even sees this price, they don't even manufacture it themselves, it's all outsourced and you can bet your ass Apple knows how much the components cost and would never expect to pay close to that little for their hardware. Then there's their cost to develop the OS, which is
      • by Ogive17 ( 691899 )
        I'm also quite involved with manufacturing, 10-15% is a general number that is oft agreed upon in our business for SGA&P (P being profit). That is basically the markup on the cost of producing the goods.

        You're kidding yourself if you think Apple doesn't wield huge bargaining power for their business. I believe Apple can purchase a finished good for under $500 if their component cost estimate of $370 is accurate.
    • The Two Locksmiths (Score:5, Interesting)

      by JBMcB ( 73720 ) on Thursday November 09, 2017 @05:25PM (#55521649)

      Good one, but I like this allegory better:

      A locksmith is just getting started. He gets a call to a homeowner who has locked their keys in their house. He shows up, pulls out his lock pick set, spends half an hour working the lock before he gets it open. He scratches up the lock face a bit and loosens the pins so the key now rattles a bit in the tumbler. Hands the homeowner a bill for $50, which, seeing all the hard work the locksmith has done, gladly pays.

      Fast forward ten years. The locksmith is now an expert at picking locks. He can do so without so much as scratching the lock face or damaging the lock in the slightest. Gets a call to a homeowner who has locked their keys in their house. Locksmith shows up, pulls out the correct tools the first time, and unlocks the door in ten seconds flat. Hands the homeowner a bill for $50, and promptly gets yelled at for having done hardly any work at all.

      • Couldn't agree more.

        It's one of the big reasons I tell my customers they are buying outcomes not time. How long it takes me to do the project isn't relevant. You have an outcome you want and I will provide you with that outcome at a very high standard. And I will charge you X. Just because I automated it to the Nth degree and did it in a fraction of the time of my competitors doesn't mean you pay me less. If anything you should pay me more as your systems were offline for less time and your internal st

        • by swb ( 14022 )


          You only flat rate what you're guaranteed able to deliver and you must treat the contract of deliverables like it was handed to you directly by Jesus and never touch anything outside the guaranteed deliverable.

          Otherwise, you sell your time by the hour. Do you know any attorney or doctor that will take random cases off the street and offer flat rate care? Most will only flat rate a very narrow spectrum of things (bladder infection or uncontested divorce), everything else is billed by the hour because th

          • Horses for courses.

            I agree with your $$ figure. I never negotiate based on hours. But also we are obviously in different industries as I can estimate extremely accurately how long a job will take me. Project variations just don't happen in my industry. If I was dealing with legacy systems that couldn't be scoped accurately I would agree with you. Then its a T&M or highly risk marked up.

      • The outrageous thing here isn't that they mark things up - everyone does that. It's how much Apple marks things up. The average net markup [] for all products and all industries is about only about 6%-10% depending on how you measure it. Apple is consistently 20%+.
  • And, of course, the cost of putting the phone together is negligible.

  • It's almost as if (Score:5, Insightful)

    by enjar ( 249223 ) on Thursday November 09, 2017 @03:47PM (#55521061) Homepage

    Apple is a company that wants to make money. They also need to do things like, you know, pay people, rent/own/lease buildings/stores, pay for electricity, pay for marketing, bandwidth, servers, turn a profit, that sort of thing. It's almost as if they are selling phones in a capitalist society where they can set a price and people can choose to buy it or not. Gasp, they are selling their top of the line phone for significantly more than the parts required to make it cost!

    I work at a software company. We don't even sell a physical thing, people just pay us for some bits they download. We must be doing an OK job because people keep paying us, it's like our software provides value for them to do work.

    • Re:It's almost as if (Score:4, Interesting)

      by tlhIngan ( 30335 ) <slashdot@w o r f . n et> on Thursday November 09, 2017 @04:59PM (#55521519)

      Apple is a company that wants to make money. They also need to do things like, you know, pay people, rent/own/lease buildings/stores, pay for electricity, pay for marketing, bandwidth, servers, turn a profit, that sort of thing. It's almost as if they are selling phones in a capitalist society where they can set a price and people can choose to buy it or not. Gasp, they are selling their top of the line phone for significantly more than the parts required to make it cost!

      Plus, Apple has to do demand-management. The iPhone X is neat, it's got a lot of neat stuff in it, but Apple has to price it right because they can't make enough to satisfy demand. Sure they could sell it at $800, but demand will outstrip supply so much that everyone will complain about it being constantly out of stock.

      Add in scalpers and the price might very well be $1500.

      Apple can only make so many of the things - there are parts that are just hard to make (e.g., the screen, the 3D camera) and Samsung cannot produce any more than they're already producing. Samsung might be able to revert one of their other lines for iPhone X screen production instead of Galaxy S/Note 8 production, but that only adds a fractional more amount of screens to the market. Ditto the 3D camera which is apparently the bottleneck at the moment.

      There in lies the challenge - where do you price it so demand is high, but not too high (or you send people to the competition and leave money to scalpers), but it's also not so high that once you satisfy initial demand that you're forced to drop the price.

      • by enjar ( 249223 )
        Yes, indeed -- the whole effort of getting a complex product out the door is a huge undertaking. Doesn't matter if it's an automobile, blender, smartphone, etc. Especially at the scale and reach that Apple has. Getting all those phones made, shipped, on display, people trained, part numbers entered, prices decided (worldwide!). I have no plans to buy any Apple product anytime soon, but they certainly have a hugely talented bunch of people who can get these things figured out. It's not by accident that they
  • by Anonymous Coward on Thursday November 09, 2017 @03:54PM (#55521115)

    And of course assembly, quality assurance, engineering, shipping, etc... are all free. What greedy bastards, how dare they make money off of a product people want to buy.

  • ... is less than 10 cent.

  • by UnknownSoldier ( 67820 ) on Thursday November 09, 2017 @04:46PM (#55521445)

    Today, the Internet was completely shocked to find out that Corporations sell things above cost -- what is collectively called "at a profit" in the business -- in order to sustain their infrastructure, support, and logistics of all the engineering, design, implementation, fees, certifications, and quality assurance needed to sell a product.

    When Millennials were asked:

    "How do companies produce these things you buy?"

    they replied:

    "I thought it was all magic pixie dust. What do you mean "people" have to spend months writing software for our devices? What's an Operating System? How is it different from an app?"

    More News at 10. Film at 11.

    • Yup. Nobody complains that a bag of socks is marked up 3x over wholesale.
      • Yup. Nobody complains that a bag of socks is marked up 3x over wholesale.

        What is the cost of the ingredients for a pint of beer? Pennies. It's mostly water. And they dare to charge five quid for it in a pub!

    • I'm curious what the actual run-down of costs are.

      If we assume $300 for BOM, then that's $700 for R&D, Salaries, Prototypes, Offices, etc...

      Assuming they sell 200 million [] of them, we are talking $140 billion. Tim Cook's salary is $2m, then another $8m in incentives, so we'll say $10m. We know that not everyone in Cupertino is making that kind of money, and they don't have 1,400 Tim Cook's on payroll. Where exactly is that line between "covering costs", "making profit", and "Scrooge McDuck greedy"?


  • The cost of a product only dictate whether it is made or not. If you cannot sell at more than cost, it's insane to produce it. Aside of that, and as soon as the price you can ask for (and getting it) is higher than cost, cost becomes a minor variable in the price.

    The main question is at what price you can maximize your profits. Can I sell so many units more if I make it 10 bucks cheaper that it offsets those 10 bucks? Will my sales drop less than what asking 10 bucks more per unit nets me? This is what dete

  • Does anybody think that the iSheep will care?

Executive ability is deciding quickly and getting somebody else to do the work. -- John G. Pollard