iPhone 6 Parts Cost A Third Of Its Total Price
A teardown analysis of the iPhone 6 and the larger iPhone 6 Plus reveals that the new smartphones from Apple cost a fraction of their selling price, according to a new report Monday. It looks like the more than 10 million units sold over the launch weekend made a nice bit of profit for the company.
Research firm HIS shared their analysis of both iPhone models in all their different memory configurations with Re/code. The price of the iPhone 6 is estimated to start at $200 for the 16GB model and go to $237 for the 128GB device.
Surprisingly, the iPhone 6 Plus is estimated to Apple a mere $16 more to produce. The cost of the 16GB version is $216 and jumps to $263 for the 128GB model. IHS estimates that labor costs for producing each device is a mere $4 to $4.50.
By comparison, the iPhone 6 sells for $649 to $849 without a contract. Meanwhile, the iPhone 6 Plus is $749 to $949 without a contract. Buying the hot new smartphone on a two-year contract through carriers like AT&T and Verizon is $199 for the smaller model while the Plus-sized beast is $299.
The breakdown by IHS also shows that Apple is also throwing in a big markup when consumers wish to upgrade the memory. While the prices of the iPhone 6 and iPhone 6 Plus increases by $100 for each upgraded step in memory, the cost difference between the 16GB model and 128GB model is only $47.
This puts Apple’s profit margins at about 70 percent for the 128GB iPhone 6 models and 69 percent for the 16GB models. These margins are approximately the same as the iPhone 5 and the iPhone 5S, according to IHS.
“They seem to be configured and priced to encourage you to buy the models with the higher memory,” IHS Analyst Andrew Rassweiler wrote in his report.
The price of the parts is not the only expense that goes into the cost of producing a device, however. There are also shipping costs, marketing costs, research and development costs, regulatory costs, software costs, and more. The true profit margin for the iPhone 6 cannot be discerned solely from the costs of the parts, but Apple appears to have built in plenty of headroom to ensure that every device is sold is profitable.
You can catch Re/code discussing the breakdown of the iPhone 6 in a video from CNBC (below).
IHS isn’t the only one to perform a teardown of the iPhone 6. iFixIt also took the phone apart to analyze its innards, but not for its cost. Instead, the firm wanted to check to see how easy it was to repair. Access to the phone parts, screen, and battery was reviewed favorably once the case was removed. The need of a proprietary screwdriver to open the case dropped the rating down to 7/10.
What do you think of the iPhone 6 breakdown? Is the phone worth the cost? Let us know your thoughts in the comments below.
[Images via iFixIt]
