Companies such as Amazon are content to sell hardware at a very slim margin in hopes of making a profit via services. Apple? They demand their money up front on the cost of the hardware and as the recent teardown and cost analysis from IHS Technology confirms, Apple’s latest smartphones carry attractive profit margins.
The market research firm estimates it costs Apple just $236 to make its new iPhone 6s Plus (16GB model), a smartphone that starts at $749. That’s a solid $513 profit on each sale although its $16 more per device than last year’s model.
IHS points out that some of the added cost is related to the fact that Apple has taken steps to make the new phones more durable, perhaps to bolster its new financing program. If you recall, Apple switched to stronger 7000 Series aluminum and is using Gorilla Glass 4 to protect the display.
IHS hasn’t yet had time to conduct a full analysis of the smaller iPhone 6s although preliminary estimates peg its bill of materials to be $211.50.
As IHS Senior Research Director Andrew Rassweiler highlights, the estimate doesn’t include all costs associated with creating the phone. It doesn’t, for example, factor in the cost of research and development, marketing, warehousing and shipping. Regardless, he added, the analysis provides insight into what’s likely the single biggest cost associated with building the phone (manufacturing) and demonstrates Apple’s priorities.