Is Apple losing money on every iPhone 5?
Earlier this week, a report revealed that the materials that make up a 16GB iPhone 5 is $199. With the cost of manufacturing, the bill goes up to $207. The 32GB model costs $217 with the Bill of Materials and manufacturing, while the 64GB costs the company $238 for materials and manufacturing.
The components that make up the iPhone 5 are a tad more expensive than the previous model, the iPhone 4S. The total BOM for that device was $188, about $11 cheaper than the current model.
The survey comes from IHS iSuppli Teardown Analysis Service, who conducted a virtual teardown of the iPhone 5. The “virtual teardown” was based on information provided by Apple as well other information IHS compiled about suppliers and the public cost of different components. The company has done virtual teardowns for many of Apple’s products.
Remember that the recently released BOM comes from a “virtual” teardown, based on speculation and cost estimates. A more accurate teardown will be made available once IHS iSuppli get their hands on the actual iPhone 5, which will be in stores tomorrow.
The Service also wanted to make clear that the BOM only reveals the price of materials and the cost of manufacturing. It does not include software, shipping, royalties or other related expenses Apple is paying for each device.
The display and touchscreen system is the most expensive aspect of the newest iPhone, ringing up at $44. This is a few dollars more expensive than the iPhone 4S due to a larger screen and more sophisticated touchscreen technology. The inclusion of high speed 4G LTE is another reason the BOM for the iPhone 5 is more expensive than the iPhone 4S, which only had 3G. This wireless section costs $34 per phone, $10 more than in the previous model.
Without contract, consumers are dropping $649 per iPhone 5, a heavy profit for Apple. However, most users will probably get the device through a wireless provider, where it will cost them $199. This is technically less than the $207 price tag Apple pays per iPhone 5 (and that doesn’t even include other related costs).
Before you start feeling sad for Apple or think they have become much stupider since Steve Jobs’ death, there is some consolation. The carriers are actually paying the full price for each iPhone 5 and taking a hit to get you hooked on their services.
Thank God, Apple is getting their money. Lots and lots of money.