Originally Posted by Crowley
It's common knowledge that the iPhone usually has the highest margin of any of Apple's products, so he's probably not totally wrong, though I agree that boiling it down to manufacturing cost is overly simplistic.
To add to your list, the licensing to use cellular and 3G/4G radios likely costs more than the parts.
Yes it was simplistic. I do have some sort of life compared so others on here so I'm not going to waste my time going into every last detail, and given the vast cost difference there isn't really any need to so to see that Apple are making huge margins on these new phones and could easily have priced them lower if they choose to do so.
The reason why I compared the price to the iPad mini cellular was that it would have most, if not all, of those licensing costs. Yet the 5c is quite a bit more expensive, even with higher material costs on the iPad with the larger more expensive battery, case, glass etc.
Personally I think the 5c pricing is a mistake. They could have used it to enter the mid tier smartphone market whilst keeping margins high. Instead it is priced as a high end phone - £479 for the 16GB model here in the UK. Clearly the US market is very different but in the UK there are more and more people that are not willing to pay that kind of money for a phone anymore - the market is rapidly becoming commoditised with cheaper alternatives available that are 'good enough'.
On contract prices are also too high. Whilst the up front cost may be ok, the monthly charge is loaded by the carrier with extra the repayment cost of the phone - monthly costs are higher for iPhone contracts compared to others here in the UK. For example:
iPhone 5c - £49 up front + £41 per month
HTC one - £29 up front + £36 per month
Samsung S4 - £49 up front + £37 per month
as you can see TCO for the 5c is more and really it is the 5s that should be compared to the S4 and HTC One not last years iPhone 5 in a cheaper case.
With a more competitive price I would have looked at a 5c for my daughter but not at that price. Last year I purchased a used iPhone 4 for £150 and use a £7.50 per month pay as you go SIM. I'll keep using that model rather than purchase new and bump her up to a 4s or 5 next year.