It’s interesting to note that the cost of making the iPhone 5s is less than that of iPhone 5, despite the former having advanced/upgraded features like the TouchID and the M7 coprocessor.
In a report published by AllThingsD and commissioned by IHS, a teardown of the iPhone 5s revealed that of the components used in making the smartphone, the display assembly costs as much as $41.
The teardown, done by IHS (check out the video here), puts some pretty interesting price tags to the stuff that goes into the making of an iPhone 5s and 5c.
Here’s a primer:
- Cost of making an iPhone 5s 16GB : $191 (+$8 assembly) resulting in $199.
- Cost of making an iPhone 5s 64GB : $210 (+$8 assembly) resulting in $218.
Compare that to the cost of making the iPhone 5 16GB which costs $197, excluding the assembly. Needless to say, despite having newer hardware like the TouchID fingerprint sensor, the M7 coprocessor and a few improvements in memory slots that consume less power, Apple has actually succeeded in reducing its production cost. Quite a feat, one would say.
The iPhone 5c, on the other hand, has gotten cheaper for the plastic shell. The result is:
Cost of making an iPhone 5c 16GB : $173
Cost of making an iPhone 5c 64GB : $183
One of the most interesting things that came out of the teardown was the fact that while iPhone 5c is very much the iPhone 5 in a different incarnation, the whole of iPhone 5c is actually very similar to iPhone 5s. Barring a few minor additions like the fingerprint sensor and the new memory chips and A7, both the devices are very similar, according to the report.
So Apple earns an insane amount of profits from each product?
At the surface that’s how it looks and put simply, that’s what it is. A $199 product sells for about $649 in the market resulting in almost $450 profit. A similar tale can be written about the iPhone 5c too.
But Apple – despite earning the highest margins for every smartphone it sells – also invests one of the largest amounts in R&D (by ratio, not merely by value), marketing and legal.
Nevertheless, it’s a huge margin. You can either be very angry that Apple makes an insane profit or you can be very proud that you buy from a really smart and passionate company.