iPhone 5 Costs $199 in Parts; Sells for $649 Off-contract

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Apple could have easily doubled the nand flash for their iPhone 5 and still made huge proffits, but why didn't they?

Because millions of iPhone's will sell without it and it leaves something to WOW people with when the iPhone 5(s) comes out.

Apple could sell the iPhone for less but why should they? Because people will buy them at the current price and still praise apple on the way out of the store.

I'm sure if consumers had to pay these off contract prices for the iPhone they wouldn't be buying them in these same quantities. The carriers are partly to blame and you can't discount their own "greed" in charging high premiums for data usage and these 2 year contracts.

The bottom line is that the iPhone is still the best made and most desired phone on the market. Competition brings down prices. Until another company creates a phone with the same rigorous manufacturing and design standards as apple, they don't have to compete and thus can charge a premium.

 
[citation][nom]Gulli[/nom]Lol, I'm sure coming up with "rectangles with rounded corners" must have cost them a fortune in R&D money (which is tax deductible). How come all of Apple's competitors get by with a lot less mark up?[/citation]
So they don't do any R&D except on corners? Intelligent analysis there. And do you bother to read the links showing that indeed Apple's competitors do in fact have the same kind of markup?

Samsung is selling the Galaxy S3 16GB model for $600, but their percentage of markup may be higher since Samsung makes many of the components used in their phones so have to purchase less from 3rd party vendors who have their own profit margins built in. I doubt highly Samsung, who supplies other companies with things like screens and memory purchase these components from someone else for their own products.
 
Marketing, shipping, warranties, unsold inventory, assembly, R&D, licensing fees for IP, software, store fronts.
 
[citation][nom]wildkitten[/nom]So they don't do any R&D except on corners?[/citation]

Pretty much, it's one of the few things they sue other companies over so that indicates they don't much else worth copying. Like it's competitors Apple also doesn't develop hardware, the cost of hardware R&D is included in what they pay their contractors who actually develop and build the hardware.
 
This is 100% normal and every cell phone (that's worth anything) has a bill of materials like this and retails for $600+, this is because of R&D and don't say apple doesn't do any R&D, the A6 is apples own custom designed core. The only other company that does that is qualcomm. Every other company uses "off the shelf" designs from ARM.
 
[citation][nom]Gulli[/nom]Pretty much, it's one of the few things they sue other companies over so that indicates they don't much else worth copying. Like it's competitors Apple also doesn't develop hardware, the cost of hardware R&D is included in what they pay their contractors who actually develop and build the hardware.[/citation]

A6, dock connector, antennas, earpods. That's just the obvious things. Apple designs a lot of custom hardware that they integrate with off-the-shelf parts. Even then, the integration requires a lot of research and testing. Does the battery last long enough, does it get too hot, is it stable, etc.
 
I'm far from an apple fan, but you forgot few big things, like the marketing and the biggest part all the software production of the OS, some programmer can cost up to 200K$ per year. Sure the case doesn't cost much to make, but the case without the OS is nothing.
 
They invest too much on Marketing people , the people in R&D and after sales supprt deserves more. I've know some people on their technical support and They earned $250 - $300 a month. (im offshore bythe way)
 
Off course the article fails to mention the components are from bulk orders which cut costs tremendously! Try getting prices low with small orders!!!
 
[citation][nom]Vorador2[/nom]Not surprised in the least. This is why Apple can post record numbers in profits, they've been doing this for quite a while.[/citation]

Yeah Apple is the only company to want a profit! lol. If you buy the iPhone without plan pay up the nose like any other smart phone. Thus get minor discount via 2 year plan.
 
So I guess the only true cost of a product is the parts only. All the time in development of iOS should not be a factor here as those software designers and developers only make minimum wage, right? Apple spends almost nothing in marketing too, right? Employee benefits, cost of building and running operations… Stop bashing and THINK! Yes they make a profit, just like all the rest do, but it's NOT $450 a phone. No where near it. You don't like it, vote with your dollar. Just remember to look at the others and judge the same way before you vote for them with your dollar too.
 
Apple fans are legendary loyal to Apple products, hence those are the people who will buy Apple iPhone no matter what. We have already seen this even during the bad times of Apple in the 1990s. Besides this group, there are other followers who just buy iPhone because the press and the news said so, who are run or somehow influenced by those above mentioned fans. This group is so called the "neutral" buyers who will buy the next phone if they heard different from the press or peers. The reason why Apple still has the market share they have at the moment is because the competition is still catching up. Eventually though, even the lower price segment of the competitor will be better than iPhone, and you will see market share of Apple shrinks to low percentage as expected by a premium price product. Apple cannot maintain the mark up forever if they want a bigger market share. It was just like back in the 80s when PC clones were cheap and Apple Mac was overpriced, and see what eventually happened when the "neutral" buyers switch to different products. In fact, this already happens in the smartphone category and the Android phone will continue to gain in market share while iPhone declines.
 
All the phones are WAY overpriced and geared to force people into contracts. I will never buy a phone on contract and will never pay more than $200 for a phone. So Apple has no fear of ever having me as a customer, but then nor does the SIII.
 
Are there other companies getting high markup on their top end smartphones when they are sold to carriers? Of course there are. Yet Apple is the only one who managed to accumulate over 100 billion dollars in unused cash in offshore accounts all over the world.

So what's different? Well, the other major players like Samsung actually design and make parts used in various industries. They spend quite a bit on expanding and streamlining their manufacturing processes and factories as well as on R&D for numerous products which eventually sell at various price points. They also spend on various humanitarian efforts around the world. Ultimately, they spend more widely than Apple does. Apple pours its R&D spending into just a tiny lineup of products which all use the same internal parts and are only released once a year. They manufacture nothing whatsoever themselves, they give nothing to charity, and they spend exactly $0 on designing cheaper products for the majority of consumers who insist on buying the most affordable technology.
 
[citation][nom]emjayy[/nom]Yet Apple is the only one who managed to accumulate over 100 billion dollars in unused cash in offshore accounts all over the world. So what's different? Well, the other major players like Samsung actually design and make parts used in various industries. They spend quite a bit on expanding and streamlining their manufacturing processes and factories as well as on R&D for numerous products which eventually sell at various price points.[/citation]


Apple spends nothing on R&D? How about its own CPU? Own Operating System? Entirely custom phone design, computer design, MP3 player designs? The entire PC industry is releasing a flood of Ultrabooks after Apple advanced the ultra-slim concept to the current stage (Yes, other slim designs came before, Apple advanced the concept, didn't invent it). Apple also set off the Tablet wave now rocking the industry, and they have an entire cloud initiative tied into their iWorld ecosphere to share music and information instantly with others. Apple is spending hundreds of millions on a green energy data farm in North Carolina. Interface design, advanced materials research, custom ASICs, a bespoke industrial design wing, the continual replacement of toxic or harmful materials with environmentally friendly materials... the list is gargantuan.

What's more, the wave of R&D that Apple sets off in other firms in the industry each time its latest products come out amounts to a ripple effect of tens of billions of dollars globally.

So nice try, but you are just way too uninformed about the company.
 
[citation][nom]fujiapple[/nom]Apple fans are legendary loyal to Apple products, hence those are the people who will buy Apple iPhone no matter what. We have already seen this even during the bad times of Apple in the 1990s. Besides this group, there are other followers who just buy iPhone because the press and the news said so, who are run or somehow influenced by those above mentioned fans. This group is so called the "neutral" buyers who will buy the next phone if they heard different from the press or peers. The reason why Apple still has the market share they have at the moment is because the competition is still catching up. Eventually though, even the lower price segment of the competitor will be better than iPhone, and you will see market share of Apple shrinks to low percentage as expected by a premium price product. Apple cannot maintain the mark up forever if they want a bigger market share. It was just like back in the 80s when PC clones were cheap and Apple Mac was overpriced, and see what eventually happened when the "neutral" buyers switch to different products. In fact, this already happens in the smartphone category and the Android phone will continue to gain in market share while iPhone declines.[/citation]


The competition is catching up? That's a laugh. The competition is advertising the latest iPhone as out of date.

Neutral people represent the majority of iPhone buyers, because Apple fans tell them to? Is your theory that they mind-control random people into a phone they don't want? Or do they use brain worms?

If Apple is already losing market share in the smartphone space, why can't anybody who claims this point to market research, while the trustworthy industry pundits point to market research showing iOS growth?
 
Apple's margins shifting negatively last quarter and I believe that will be a growing trend as Android devices continue to increase the competition.

The corporate greed you speak of drives the innovation that provides you with the technology you know and love without the profit motive...well take a look at the Native Americans before the Europeans arrived.
 
[citation][nom]Papou[/nom]I'm far from an apple fan, but you forgot few big things, like the marketing and the biggest part all the software production of the OS, some programmer can cost up to 200K$ per year. Sure the case doesn't cost much to make, but the case without the OS is nothing.[/citation]

Yes, but the cost of replication is zero, it's the difference between fixed and variable costs.
 
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