According to this...no (from BW article): In 2009, iSuppli estimated that the components and materials used in the iPhone 3GS cost about $179. The materials costs on that device have since dropped to $134 as the prices of certain components have declined...
Thats not the point - this isn't an attack on Apple's pricing it's a typical industrial teardown BOM. You can get them for everything. Retail price is typically 2-4x BOM depending on how complex the product is and how long it will be in the market
It's interest to the consumer is when a cell phone company is charging you $500 for the phone AND locking you into a contract.
Unsourced claim here: saw somewhere that about 75% of the cost of medication goes to advertising. We're taught to believe that it's the R&D that's the expense, but it's not; it's advertising.
> Unsourced claim here: saw somewhere that about 75% of the cost of medication goes to advertising. We're taught to believe that it's the R&D that's the expense, but it's not; it's advertising.
A huge fraction goes to marketing. However, that includes doctor education, free pills for poor people, and so on. Which of those do you want to give up?
The amount that goes to nd-user advertising is relatively small. Since at least some of that gets folks to go to the doctor to fix something that they didn't know could be fixed, and thus improves their lives, I'm not convinced that it's bad. Then again, I think that the goal of a health system is to improve health, not control costs. (Hypocondriacs do their thing regardless of advertising.)
"The gyroscope chip, for example, apparently costs Apple $2.60 while it costs $2.90 in quantities of 200,000. These disparities pop up in a number of places, which, sadly, lends an air of WTF to the proceedings."
I'm not sure I understand this last statement. Should Apple not be getting a higher volume discount? I assume they're buying over 200,000 single parts.
As another commenter noted, design, innovation, packaging, marketing, employees and obviously profit/taxes... aren't counted here.
But yes, the iPhone is pricey if I compare it to other devices. For example, Google Nexus One have a better resolution, memory and processor that the 3GS, but the 3GS is more expensive.
I don't bother paying $1K or more on a phone, but at least this phone comes with cutting edge technology from the inside (speedy processor, large memory, Open OS...) and the outside (High resolution screen and Camera, amazing design...)
Well... If you include the money you'll spend for being in contract for the next two years, you're probably well over $1000. But, I don't think the OP was trying to say the down payment on the phone alone costs $1000.
Keep in mind that iSuppli's reports have been described (by daringfireball, as well as others: http://daringfireball.net/2007/07/isuppli) as "bullshit". A lot of their price numbers (especially the ones for unusual parts, like the CPU and LCD in the iPhone 4) are pretty much pulled out of thin air.
Does John Gruber have any experience in building hardware that would allow him to reasonably claim any such teardown report as bullshit? Or did he just do some simple math in his head and think to himself that Apple doesn't make that much money so it must be BS? Hardware costs are just one piece of the puzzle, manufacturing/IP/shipping/R&D/software/marketing are others.
The prices vendors quote are also, in a sense, pulled out of thin air. There is some floor to the price based on cost to produce and minimum acceptable margin, and volume also plays a role. But, there are many other factors that are subjective. For example, perhaps the part manufacturer is looking to get its first part into Apple, so they knock some more off the price.
While only Apply knows how much an Apple-proprietary processor costs, it is possible to estimate a cost for it based on process technology, die size, pin count, package, etc.
It doesn't cost $188 to make; it costs $188 for a buckets of parts :)
the 32GB iPhone 3GS used to retail in Australia for around US$850 ex tax. Assuming Apple's usual margin of 20-30% (let's say 30), and allowing another $50/unit for support/warranty issues, that puts the cost at something like $560 each.
The iPhone has a much higher profit margin. Considering they what they sell the iPod Touch for and how similar it is in parts, you can do the math yourself. (The Touch hasn't been updated in a while, so we'll need to see a Touch HD for a good comparison now.) They even give the Touch away if you buy a Mac for college.
Another thing, Apple charges more overseas. The 3GS retailed for a no-commit price in the states for $599/$699 depending on storage.
Windows 7 costs $1.20 to make. 20 cent dvd + 20 cent packaging + 80 cent booklet (or whatever is in there.)
A high end CPU costs below $3 in material costs. (Numbers purely guessed)
Given these examples I find it wrong to accuse Apple for selling the iPhone at that price point. At least to me these "Product X costs Y USD in production" articles sound a bit accusing.
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[ 2.8 ms ] story [ 82.2 ms ] threadDidn't think so.
It's interest to the consumer is when a cell phone company is charging you $500 for the phone AND locking you into a contract.
Source: http://www.pkdcure.org/Research/Resources/FDADrugDevelopment...
http://en.wikipedia.org/wiki/Pharmaceutical_marketing#Econom... http://www.sciencedaily.com/releases/2008/01/080105140107.ht...
A huge fraction goes to marketing. However, that includes doctor education, free pills for poor people, and so on. Which of those do you want to give up?
The amount that goes to nd-user advertising is relatively small. Since at least some of that gets folks to go to the doctor to fix something that they didn't know could be fixed, and thus improves their lives, I'm not convinced that it's bad. Then again, I think that the goal of a health system is to improve health, not control costs. (Hypocondriacs do their thing regardless of advertising.)
We are talking gross margin here, not net profit.
I'm not sure I understand this last statement. Should Apple not be getting a higher volume discount? I assume they're buying over 200,000 single parts.
On the other hand it explains the iPod Touch prices which have always seemed cheap by comparison.
But yes, the iPhone is pricey if I compare it to other devices. For example, Google Nexus One have a better resolution, memory and processor that the 3GS, but the 3GS is more expensive.
I don't bother paying $1K or more on a phone, but at least this phone comes with cutting edge technology from the inside (speedy processor, large memory, Open OS...) and the outside (High resolution screen and Camera, amazing design...)
While only Apply knows how much an Apple-proprietary processor costs, it is possible to estimate a cost for it based on process technology, die size, pin count, package, etc.
the 32GB iPhone 3GS used to retail in Australia for around US$850 ex tax. Assuming Apple's usual margin of 20-30% (let's say 30), and allowing another $50/unit for support/warranty issues, that puts the cost at something like $560 each.
Another thing, Apple charges more overseas. The 3GS retailed for a no-commit price in the states for $599/$699 depending on storage.
A high end CPU costs below $3 in material costs. (Numbers purely guessed)
Given these examples I find it wrong to accuse Apple for selling the iPhone at that price point. At least to me these "Product X costs Y USD in production" articles sound a bit accusing.