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$1249 iPhone XS Max costs Apple $443 to make

By midian182 · 36 replies
Sep 26, 2018
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  1. Apple unveiled three phones at its Gather Round media event earlier this month: The iPhone XS and iPhone XS Max, which start at $999 and $1099, respectively; and the more 'affordable' $749 iPhone XR. Ottawa, Ontario-based firm TechInsights, which boasts five in-house teardown laboratories, took a look inside the 256GB version of the iPhone XS Max and worked out how much its parts and construction cost Apple. It came up with a final figure of around $443, just over $800 less than the retail price.

    It goes without saying that this BOM (bill of materials) estimate does not take in consideration the massive R&D expenditures that go into developing a device like the iPhone. Apple develops much of the phone's internals in-house as well as the software which is one of the company's key differentiators.

    TechInsights did a similar analysis on the now discontinued $999 iPhone X last year and estimated it cost Apple around $357.50 per unit. As was the case with the iPhone X, the iPhone XS Max’s most expensive component is the OLED display, which costs $80.50. The iPhone X, for comparison, has a 5.8-inch screen that came in at $77.27.

    Increasing the screen size by 0.7 inches for just a few dollars is impressive. Speaking to Reuters, Al Cowsky, who oversees cost analysis at TechInsights, said Apple managed to keep expenses down by removing 3D Touch-related components. “All told, what they took out adds up to about $10, so this $80 estimate would have been about $90,” he said. “They had a trade-off in cost.”

    The inclusion of Apple’s all-new A12 Bionic chip, the first 7nm chip to appear in a handset, also pushed overall manufacturing costs up.

    Other factors not considered include marketing, warehousing and shipping, although by far research and development is what will bulk up the real cost of the phone. In 2015, CEO Tim Cook said during a conference call that he has "never seen [a bill of materials] that is anywhere close to being accurate."

    Despite the higher retail prices, it appears that many consumers prefer Apple’s large screen offering. The iPhone XS Max outsold the iPhone XS by up to four times over its launch weekend.

    Permalink to story.

     
  2. Squid Surprise

    Squid Surprise TS Evangelist Posts: 2,102   +1,135

    While I'm sure the profit margins are huge, there is no way to get a real accurate cost assessment, as no one outside of Apple knows how much money was spent in R&D for all of the proprietary hardware (and software) in the device - most notably the A12 chip....

    Costing it at "$443" is actually a bit disingenuous, as the specific amount leads many to believe that this is a very accurate number - whereas "$450" would seem like more of the estimate that this really is...

    Apple can charge what they please, since there really isn't any competition.... other than Samsung which is about the same price as well...
     
    MaXtor, Reehahs, 5W33J1N and 5 others like this.
  3. NimbusTLD

    NimbusTLD TS Booster Posts: 94   +71

    65% profit? To be honest, that's what our business aims for too, and Apple have been in this ball park for years. The closer to 70%, the happier the execs...
     
  4. 79Blackstone

    79Blackstone TS Rookie

    "Apple likes to keep its margins high"

    Show me a business that likes to keep them low. This article reminds me of people who used to say that music albums are a rip off because the CD only costs 4p to produce.
     
  5. Ravey

    Ravey TS Addict Posts: 132   +62

    Also, It seems to be just factoring in costs for parts. Other costs to consider are; labour, packaging, logistics, Advertising. Probably also warranty costs to cover faulty units which are returned. I bet the actual profit margin is a lot smaller than people think.

    It would be interesting to compare the parts cost to that of another flagship phone by Samsung or OnePlus (or both).

    Do you think you could find those as well Rob?
     
    79Blackstone likes this.
  6. Burty117

    Burty117 TechSpot Chancellor Posts: 3,352   +1,133

    eerrrmmm.... What? No competition in the Smartphone market? Ok... Yeah... I'll just... Yeah...
     
    Mixkhata, senketsu and 79Blackstone like this.
  7. 79Blackstone

    79Blackstone TS Rookie

    No clicks to be had putting the boot into Android - nobody cares enough
     
  8. Ravey

    Ravey TS Addict Posts: 132   +62

    lol! that may be true, everyone loves to hate iphone, but I am genuinely interested in a comparison in costs compared to other brands.
     
  9. p51d007

    p51d007 TS Evangelist Posts: 1,705   +989

    I don't care for the iPhone or the Samsung phones. Personally, I think for what they do, people are "buying a name", but, that being said, it ain't MY money. Apple and other manufacturers can charge whatever they want. If people continue to buy them, so be it. Look how many SUV's are on the road. 99.9% of these NEVER get driven for their intended task SPORT & UTILITY. They are used as mini-vans and mom cars. But, people pay the stupid prices to have them and they are VERY profitable for the auto industry.
    Consumers are a strange bunch. Will pay whatever you want for things like smartphones, SUV's but complain when a cell phone company charges a 12 dollar "fee" for something.
    Personally, I buy phones on the cheap. Use them a couple to 3 years, then get another one. And by cheap, I mean usually last years big thing, which usually gets discounted A LOT because they want to get rid of the excess inventory.
    Same thing with cars. I don't buy a "brand new one". I'll by a lease return or similar. They have the warranty still, are certified (typically), and you don't have the new "take it off the lot, the price went down X dollars" problem either.
     
    Dimitrios likes this.
  10. Sausagemeat

    Sausagemeat TS Maniac Posts: 293   +141

    Apple can charge what they like, they don’t have any competition. The closest are devices that run Android and they are just no where near as good.
     
  11. Faplyboy

    Faplyboy TS Rookie Posts: 22

    Well……
    since they are a trillion dollar company at this point even if they go bankrupt somehow with company they can still easily live up with that money but consider this as worst scenario which wont happend any time sooooon…
    they could of at least make one generation of phone without being so selfish with cost and make etc this same iphone for 500$. they would of beat all competitions like Samsung, huawei with cheap price, and they would still get in profit by damn 60$ which at the end still is a trade off for them and they would get a huge amout of people that want high end iphone but are not willing to sell their apartment for it.
     
  12. Faplyboy

    Faplyboy TS Rookie Posts: 22

    you clearly never used high end android before….
    so many apple fans who tried android back in the days when it actualy was crappy and keep saying it is still crap… Android on phones over 300 eur is damn smooth with CUSTOMIZATIONS FREEDOM which ios lacks of. its like being in a prison forced to have same icons without re shaping them or doing anything to them. ew.
     
  13. Adi6293

    Adi6293 TS Enthusiast Posts: 75   +45

    Hmm I think they're way better :)
     
  14. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,615   +1,098

    I'm with you on this one mate, they don't take into consideration -as mentioned and some not mentioned already- the price for marketing, the HH required to build it, the pre and post build costs, testing, paying employees, keeping the lights on, physical store rentals, so on and forth.

    Anyone who thinks that the phone costs as much as the hardware is priced, is simply said very plain.
     
  15. toooooot

    toooooot TS Evangelist Posts: 391   +171

    Call me a ship but that's amazing how much it costs to stuff this device with technology and tears of Foxcon slaves. It is amazing to where we have come with the evolution of smartphones. No other industry has ever received so much funding research and innovations at the highest quality of producing and transferring them into life.

    I will keep buying cheaper devices but I said it, apple makes amazing devices.
     
  16. Squid Surprise

    Squid Surprise TS Evangelist Posts: 2,102   +1,135

    You clearly failed to comprehend my post... Other than Samsung, what device competes (successfully) in the high end smart phone business?

    I'm not talking about $300 phones here... I'm talking $1000 devices... there really aren't any... there's a reason why Apple is a Trillion Dollar company...
     
  17. Burty117

    Burty117 TechSpot Chancellor Posts: 3,352   +1,133

    I... I don't even know where to start... You're just so wrong it's painful...

    There's LOADS of high end phones, literally tons of them, OnePlus, Huawei, Samsung and Google to name a few. You're classifying a high end phone purely based on the price, If Nokia released the 3310 right now at $999 you'd consider it a high end phone?

    There's honestly loads of high end phones out there and as per a lot of the reviews for the latest iPhone, it's still not the best phone out there, it just has the price tag. I've been seeing quite a few reviewers compare the latest iPhone to $300 Android phones, That's when you know your product is simply over-priced.

    Are the latest iPhones good devices? Absolutely, are they worth $1200? Pretty much every review I've read, the resounding answer is no, no they're not worth that price. I should get to test drive the Xs Max in a weeks time (The joys of working for a company where the CEO loves iPhones) and I'll make my mind up then but I have this feeling, if I had £1200 to blow on a phone, I'd just buy a OnePlus and spend the rest on a holiday. Maybe the Xr can bring much better value if you really need to be in the iOS and Apple ecosystem and tempt me back to the dark side ;)
     
    Mixkhata and cliffordcooley like this.
  18. tipstir

    tipstir TS Ambassador Posts: 2,832   +191

    iPhone for those who do not want to tinker with their phones. It's premium phone made for those who just want something to stand out from the crown. High end like Lexus an beyond. Prices doesn't matter to the masses they will pay anything to have the latest phone. Right now it's Samsung Galaxy Note 9 is being asked would you buy one. I am not interested in that brand. 1 TB external MicroXSD yeah but my Motorola Z2 Force has 2 TB external slot for the future. How to you like that Samsung! Apple won't you give you that feature because they rather charge you to use their Premium iPhone with their expensive Premium iCloud Service remember 5GB for free even for Windows 10 users. After that you pay baby!
     
  19. Squid Surprise

    Squid Surprise TS Evangelist Posts: 2,102   +1,135

    I'm wondering if you're being deliberately obtuse... if so, sorry, I've taken the bait and will attempt to educate you.

    First of all, I understand there are plenty of high end phones... but, other than Samsung, none really compete with the iPhone. I'm not talking about actual quality here (although many would argue that is also true), but simple sales and demographics.

    If you look at sales numbers of high end smart phones (I'll leave a link for India, but other countries are easy to find as well)
    https://www.cultofmac.com/456136/india-marketshare-iphone/

    You see here that Apple completely crushes the high end market - with Samsung the only real competition...

    This is simply a fact... it doesn't mean that those other high end phones aren't as good or better than an iPhone... it simply means that the VAST majority of people BELIEVE that iPhones are the best phone out there - and they're proving it with their wallets.

    Whether the iPhone is worth $1000... or $1200.... is IRRELEVANT... millions of people think it is, and are buying them up almost as fast as Apple can churn them out.

    Hence my original line stands: "Apple can charge what they please, since there really isn't any competition.... "
     
    Sausagemeat likes this.
  20. Lew Zealand

    Lew Zealand TS Addict Posts: 199   +145

    The ultimate price is set by the customer. If they don't pay, you don't sell and need to lower the price. Clearly there are enough people out there willing to pay the $1K price for Apple and Samsung phones, so the bill of sale for the parts is mostly irrelevant.

    It's just economics.
     
  21. Dimitrios

    Dimitrios TS Maniac Posts: 233   +142

    I guess there is a good market for drug dealers & people with low self esteem. The people that own the most expensive phones from what I see are those two. I have the money to buy one but I won't give APPLE my money.
     
  22. Dimitrios

    Dimitrios TS Maniac Posts: 233   +142

    Same here!
     
    Mixkhata and p51d007 like this.
  23. Sausagemeat

    Sausagemeat TS Maniac Posts: 293   +141

    My last Android phone was the Note 8, it was hopeless by comparison.

    I would say to you that you have clearly never used an iPhone...
     
  24. alabama man

    alabama man TS Guru Posts: 563   +355

    Not that bad, I thought they paid less than 5% for everything they sold.
     
  25. Burty117

    Burty117 TechSpot Chancellor Posts: 3,352   +1,133

    I've had 3 friends already buy the Xs Max, All of them said the same thing to me: "If I get an android phone, I lose all my apps". And I tell them everytime, the money you save buying an Android device, you can re-purchase the same Apps and still save a small fortune. It's how I got out of the Apple Ecosystem at least.
    I don't really know what you're trying to prove here, Not only does everyone know the iPhone sells well but what are you trying to prove? There are no other High End phones because they don't sell as well? I'm sure there's a car analogy here ;)

    Any who, Something I see everyday are iPhones, They are nothing special anymore, Haven't been for a few years now, people buy them because they've bought into the Apple Ecosystem and it is not only painful to leave, it's costly as well.

    I applaud Apple for the strategy, Make it hard to leave so people won't. I just hope newer buyers, people who haven't touched Apple products before, Aren't being suckered in, here in the UK at least, I don't know anyone who wasn't already an Apple fan, to go out and purchase the new iPhones.
     

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