What iPhones cost to make

[Phogg]

Originally Posted by xg4bx

Just an interesting story I came across.



http://uk.finance.yahoo.com/news/wha...t-to-make.html


From what I've heard, for an extra $50 usd, they could be making these in America and helping our economy and job market considering we buy the most apple stuff here but hey, whatever.

When I was in manufactoring, waste disposal costs even for fully biodegradable materials alone exceeded the labor cost.

Add in the costs of over bearing building regulations and the move overseas was a no brainer.

Say we were bringing in new injection molding machines in the plastics department. The new machines were heavier than the floor could bear, so we had to tear up the old floor, re-do the plumbing, and lay a thicker slab with more rebar to support the weight. Waiting on mandated inspections made a five day job take six weeks. That is five additional weeks of down time we would not have had overseas.

At the end of the day job flight from the west is self inflicted.

[5thWiggle]

Originally Posted by David Munch

...Which they've only in recent years started doing, and *only* for the main CPU in iOS-devices. The avalanche of other chips in their products, are still off the shelf components.

They *used* to design a fair amount of the sillicon used in the macs (sound chips, memory controllers, etc), a lot of it was in the form of programable gate arrays. Not the processors though. Don't know if they do anymore since they switched to Intel chips.

Edit: Apple spend 2.500$ billion in 2011 on R&D, which is considered quite low in the industry, compared to their income

Almost any amount is going to look low compared to their income.

[JSWolf]

In the US, you can get an iPhone 4GS for $199 with a 2-year contract with AT&T.

[HarryT]

Originally Posted by JSWolf

In the US, you can get an iPhone 4GS for $199 with a 2-year contract with AT&T.

What's the total cost over the 2 years of the contract? ie, how much is the monthly payment?

[JoeD]

Beyond just the part cost of the phone, there's shipping costs, storage costs, Apple store costs, staff costs, OS research costs, software development costs, patent licensing costs, legal fund pools, hardware and space for data centres and I bet there's a lot I've missed out...

The break even point Apple will need to charge for an iPhone will be quite a bit more than the part breakdown cost imo. What that point is, only Apple knows and I bet they're not going to tell :P

[Dave_S]

Originally Posted by JoeD

Beyond just the part cost of the phone, there's shipping costs, storage costs, Apple store costs, staff costs, OS research costs, software development costs, patent licensing costs, legal fund pools, hardware and space for data centers and I bet there's a lot I've missed out...

All of those factors affect ALL phone manufacturers, not just Apple. That should mean that a manufacturing profit comparison is reasonably fair since all the hidden cost are born just the same by all the competing companies. In fact, Apple has a somewhat unfair advantage in the factors before and after manufacturing because they a have a lot of clout in forcing their way on vendors, dealers and service providers.

[HarryT]

Originally Posted by Dave_S

All of those factors affect ALL phone manufacturers, not just Apple. That should mean that a manufacturing profit comparison is reasonably fair since all the hidden cost are born just the same by all the competing companies. In fact, Apple has a somewhat unfair advantage in the factors before and after manufacturing because they a have a lot of clout in forcing their way on vendors, dealers and service providers.

One would expect Apple to have higher marginal costs than makers of Android phones, though, because Android phone makers don't have to pay for the development of the o/s, do they? (Apologies if I'm wrong - I don't know how Android licensing works)

[Dave_S]

Originally Posted by HarryT

One would expect Apple to have higher marginal costs than makers of Android phones, though, because Android phone makers don't have to pay for the development of the o/s, do they?

Android is open source, so Android phone makers do not pay a license to Google to use it. iOS is derived from OS X, with which it shares the Darwin foundation. Of course the present iOS is a long way from it's open source roots, but the development cost to Apple is incremental, and not on just one iPhone version. Manufacturer's that use the Android OS do not pay for the OS itself but they do have a ( likely higher) cost in tuning the OS and it's core drivers to their hardware. They also have to do it in a relatively short time, since they do not get it from Google until Google is ready. Also, all of the top tier companies do a lot of software development in custom user interface design to differentiate their product from their competitors. The whole system of phone design is not simple enough make many very accurate comparisons, but manufacturing costs elements are pretty much the same for all of them. The possible exception is Apple due to the extortion they apply due to their gorilla status on vendors, dealers, and service providers.

[teh603]

Originally Posted by Phogg

Say we were bringing in new injection molding machines in the plastics department. The new machines were heavier than the floor could bear, so we had to tear up the old floor, re-do the plumbing, and lay a thicker slab with more rebar to support the weight. Waiting on mandated inspections made a five day job take six weeks. That is five additional weeks of down time we would not have had overseas.

At the end of the day job flight from the west is self inflicted.

Looks more to me like someone's experiment in small government that backfired, if the building inspector's office doesn't have enough minions to resolve inspections in a timely manner. Too many Americans in high places don't understand that some of their taxes really do go toward improved government services, or that by percentages of population the US has a very small government which is dwarfed by that of the average third world nation.

[Phogg]

Originally Posted by teh603

Looks more to me like someone's experiment in small government that backfired, if the building inspector's office doesn't have enough minions to resolve inspections in a timely manner. Too many Americans in high places don't understand that some of their taxes really do go toward improved government services, or that by percentages of population the US has a very small government which is dwarfed by that of the average third world nation.

Looks like someone doesn't like to hear the truth about dealing with any governmemt gjven too much autbority and zero consequences for bad performance. This was normal, in a big city durinv the Clinton years.

I guess a lot of us just dont see Clinton as being an experement in small government the way you do. More inspectors means an even bigger gap between government cost and the tax base. Inspectors who, (if a permemant hire) will have a pension cost decades after they leave the work force. The west has run for just over seven decades on credit, and it is about to crash.

[Dave_S]

Originally Posted by Phogg

I guess a lot of us just dont see Clinton as being an experement in small government the way you do.

And yet, I think that I remember at least one of the Clinton years where the budget was actually balanced.
His successor took care of that in spades.

[OtterBooks]

Apple's large profit margins are no secret. Even when you factor in everything their markup is atypically large. That isn't something they've ever been shy about, and why should they? Apple's customers and shareholders seem content with the situation.

[HarryT]

Originally Posted by OtterBooks

Apple's large profit margins are no secret. Even when you factor in everything their markup is atypically large. That isn't something they've ever been shy about, and why should they? Apple's customers and shareholders seem content with the situation.

Absolutely - Apple do make decent profits. But to claim, as the original article does, that the difference between the manufacturing cost of the iPhone and its selling price is all "profit" is just... silly.

[Dave_S]

Originally Posted by HarryT

But to claim, as the original article does, that the difference between the manufacturing cost of the iPhone and its selling price is all "profit" is just... silly.

Of course, you are correct that to call the figure that was given the actual "profit" is at least an exaggeration and maybe a little silly. However, that number is not diluted by very much, because all of the ancillary costs are spread over huge numbers of phones, only exceeded by Samsung's phone output. Since Samsung's phones are of a generally higher quality and much higher performance, while being sold at a lower unit cost, would seem to indicate that Apple's realized profits border on the obscene.

[OtterBooks]

Originally Posted by HarryT

Absolutely - Apple do make decent profits. But to claim, as the original article does, that the difference between the manufacturing cost of the iPhone and its selling price is all "profit" is just... silly.

I tend to be pretty skeptical of third-party cost analyses in general. I recall that when the Kindle Fire was released, reports varied so much between 'professional' cost analysts that you could almost pick a price and find someone to corroborate it.