So if iPhone gross margin is 60% then the rest of Apples products have a gross margin below 20%. No way in hell is that true.
Maybe on the MacPro/MacMini it's 20%. I don't see the iMac or Laptops being that low entirely because if you buy all the parts separately (OEM) it still requires assembly, and the store you buy OEM parts from still has their own markup.
Why would any of those things be included in "hardware material costs"? The article was very clear that it was the cost of the actual hardware they were reporting/guesstimating on.
Those other costs you mention - while absolutely valid - are fixed costs. They remain the same whether Apple sells 10,000 phones or 100 million phones. The costs reported in this article are supposed to be an approximation of how much it costs to manufacture each phone now that all of the R&D is done.
C'mon now. The underlying motivation of all of these "this is what we think it costs Apple to build an iPhone... blah blah blah" are to paint Apple as a company gouging customers on unit price. To say that fixed costs are independent of whether Apple sells 10,000 or 100 million units is slanting the message towards the disingenuous because these expenses are absolutely factored into the final unit price. Apple's decision to take on enormous R&D expenses like material, tooling, labor, and nonrecurring engineering expenses is based on an estimation by the company that they are going to sell a minimum number of phones in a certain period of time. In Apple's case the sales numbers and rates have to be huge to justify the investment. If Apple "only" sold 50 million 6S products in the first year it would be a disaster, not just a slight hit to their profit margins.
Exactly and to take that further - the 21.5% margin is across the product range, not just the $649 model. So even the people whining that memory upgrades should not be $100 per tier don't get it right. More likely Apple is selling the 16gig model at a lower margin and the 128gig at a higher margin with the mid range being the balance point.
(Disclaimer: I think the bottom tier should be 32gig)
(Disclaimer on my disclaimer: I also think the complainers don't consider that the middle tier is 64gig not 32gig, so really the $100 bump is double the value of what it could be)
(Disclaimer to the disclaimer disclaimer: Have any of these complainers gone out and bought a 64gig micro SDhc for their 16gig Android phone? How much is it eh for a fast and decent quality brand. $100AUD.. yeah........)
sorry got a bit off track there
Exactly. On top of that, NO consumer-grade SD Card is capable of the speed and stability of Apple's internal storage. That's something the Android community just can't understand, even when the hard proof is smacking them square in the face.
There is also the "small" problem that this guys present an assembly cost and fail to warn that it doesn’t include many of the manufacturing costs, such as machining, energy, etc.
The AI writer or IHS? I'm pretty sure IHS is clear about what they're estimating in their report. Blog writers certainly aren't.
Senior Research Director Andrew Rassweiler said his firm's numbers do not account for research and development, logistics, marketing and other costs.
Not accounting for research and development, logistics, marketing and other costs, the various chemicals that make up the human body cost about $50 less than the iPhone 6s components.
The AI writer or IHS? I'm pretty sure IHS is clear about what they're estimating in their report. Blog writers certainly aren't.
I am referring to IHS, which only states "numbers do not account for research and development, logistics, marketing and other costs". They are basically giving the wrong idea about manufacturing costs by talking about assembly costs and omitting that those other costs include plenty of manufacturing costs.
I've never seen anyone post that it should be sold at component and assembly cost. Feeling persecuted? Angry? At an estimate of component and assembly costs? Chill.
Great news. Can I have a list of the parts so I can get them and build my own??
Sure, but the processor, logic board, and case are proprietary so you will have to CNC your own case, build your own board, and fab your own A9 processor (good luck with that last one). How many tens/hundreds of man-years went into the A9 development?
These so called BOM analyses are absolutely intended to create negative bias and not simply intended to provide information of interest to the general public. Why not try to estimate how much Apple spends on pencils and lawn care? What other purpose does this analysis possibly serve?
Why would any of those things be included in "hardware material costs"? The article was very clear that it was the cost of the actual hardware they were reporting/guesstimating on.
Those other costs you mention - while absolutely valid - are fixed costs. They remain the same whether Apple sells 10,000 phones or 100 million phones. The costs reported in this article are supposed to be an approximation of how much it costs to manufacture each phone now that all of the R&D is done.
Actually it does matter how many units are sold relative to those costs, Yes those cost are fix for the time period units are sold over, however, the Margin is directly impacted by how many units are sold. The large number of units sold means the total cost are spread over more units so the cost per unit is less. This is why they can not say for sure what margins will be until the last unit is sold so they can do the math.
But these guys who analyze the cost of parts and that is all they are doing is completely wrong, I personnally negotiate part pricing and know the real cost that supplier sell at and I never seen any of these third parties come close to the real price. I am not talking about being off 1% or 2% they usually off 10% to 20% and they not always off high or low, they off in both directions depending on the part. Our marketing department use to pay this third parties to do teardowns and cost analysis of competitors products then Marketing would come in and say our product cost to much since the third parts claim the competitors make their products for less. When we would do the same analysis with our own database of costs (BTW our purchase volumes were usually much higher than the competitors) we would show they were usually the same cost or a little more using our our pricing.
I've never seen anyone post that it should be sold at component and assembly cost. Feeling persecuted? Angry? At an estimate of component and assembly costs? Chill.
Huh! You hear all day long that Apple is ripping people off because of these piece crap numbers; all day long.
Even if they don't say it should be sold for that, they'll whine that Apple should sell their phone $200, $300 less because not doing so is just... "greedy". Whining for the phone should be $350, is not that much different from saying it should be $250; both are moronic.
Even if they don't say it should be sold for that, they'll whine that Apple should sell their phone $200, $300 less
The original claim was people posted that Apple should sell product at component and assembly cost. I've never seen it. Nobody has posted any links to such posts. I still believe it is an emotional exaggeration.
What you are talking about has little to do with the original claim or my response. Raging against imaginary slights is pointless.
Huh! You hear all day long that Apple is ripping people off because of these piece crap numbers; all day long.
Even if they don't say it should be sold for that, they'll whine that Apple should sell their phone $200, $300 less because not doing so is just... "greedy". Whining for the phone should be $350, is not that much different from saying it should be $250; both are moronic.
Yes, the detractors don't know what's going on, all said. They don't understand what the numbers really mean, assuming they have any meaning. I really question AI making a story of it at all when they don't bother to address what the numbers don't mean, even if they were correct. The article pointing out the "guestimators" quote is lamp shading the issue, in my opinion.
There is nothing wrong with this article the way it is written. The anger on this site seems to have more to do with how some people may interpret it - but the problem lies with the intelligence and comprehension skills of the reader that misconstrues the article than with the article itself! The article is clear that this is a price for the raw components that make up the two new iPhones. It doesn't try to suggest that people are being gouged. Perhaps they should have included a disclaimer that lists some of the other costs associated with putting an iPhone in the hands of the actual consumer - but I don't think that's entirely necessary since it's obvious to most people of average intelligence or better that there are a lot more costs involved than just a basket full or parts. As others have suggested, there are costs associated with retooling assembly lines, assembly line workers, packaging, distribution, iOS, development salaries, prototyping, producing documentation, marketing, accessories, research, sourcing, legal, localization, and probably a dozen more things I haven't mentioned. It's been well publicized that the margin on the iPhones are approximately 35-40%. Many of those costs, as I said earlier are fixed. Of course they need to be recouped out of the sale of the phones - but as the number of phone sold increases, the amount (per phone) that is needed to cover the development, retooling, etc expenses becomes smaller.
All this article says is "Now that all of the development is done and paid for and the factories and assembly lines have been retooled to produce this phone - this amount is the amount Apple has to pay to run each phonethrough those assembly lines." So if Apple wants to build 20 million phones of a specific model, they will have to pay "this much" times 20 million for the parts required to do so! The other costs are paid for and budgeted for on different line items internally. It's only when it comes down to calculating margins and overall profitability that those costs need to be spread out over the number of phones actually produced - and it can't be calculated accurately until they stop manufacturing a particular model!
So there's nothing at all wrong with this article. If people read it and think that Apple should be selling the phones for $300 because they only cost $235 to make - then there's something wrong with that person!!! The article provides an interesting (to me) metric which means almost nothing in the grand scheme of things. Assuming of course that the information is accurate (which may not be true), the suggestion that information like this shouldn't be released because "some" people may misinterpret it is censorship and a concession to stupidity.
The people that are going to complain about gouging and point to this article as evidence would just complain about something else if this article didn't exist. For the rest of us, it gives us a metric we can use to gauge the overall intelligence of our fellow readers! If someone posts comments implying that this article proves Apple is ripping people off - we instantly know that they are either stupid - or trolling - and we can probably safely add them to our ignore lists since it's unlikely they'll ever be able to contribute productively to any conversation!
There is nothing wrong with this article the way it is written. The anger on this site seems to have more to do with how some people may interpret it - but the problem lies with the intelligence and comprehension skills of the reader that misconstrues the article than with the article itself! The article is clear that this is a price for the raw components that make up the two new iPhones. It doesn't try to suggest that people are being gouged. Perhaps they should have included a disclaimer that lists some of the other costs associated with putting an iPhone in the hands of the actual consumer - but I don't think that's entirely necessary since it's obvious to most people of average intelligence or better that there are a lot more costs involved than just a basket full or parts. As others have suggested, there are costs associated with retooling assembly lines, assembly line workers, packaging, distribution, iOS, development salaries, prototyping, producing documentation, marketing, accessories, research, sourcing, legal, localization, and probably a dozen more things I haven't mentioned. It's been well publicized that the margin on the iPhones are approximately 35-40%. Many of those costs, as I said earlier are fixed. Of course they need to be recouped out of the sale of the phones - but as the number of phone sold increases, the amount (per phone) that is needed to cover the development, retooling, etc expenses becomes smaller.
All this article says is "Now that all of the development is done and paid for and the factories and assembly lines have been retooled to produce this phone - this amount is the amount Apple has to pay to run each phonethrough those assembly lines." So if Apple wants to build 20 million phones of a specific model, they will have to pay "this much" times 20 million for the parts required to do so! The other costs are paid for and budgeted for on different line items internally. It's only when it comes down to calculating margins and overall profitability that those costs need to be spread out over the number of phones actually produced - and it can't be calculated accurately until they stop manufacturing a particular model!
So there's nothing at all wrong with this article. If people read it and think that Apple should be selling the phones for $300 because they only cost $235 to make - then there's something wrong with that person!!! The article provides an interesting (to me) metric which means almost nothing in the grand scheme of things. Assuming of course that the information is accurate (which may not be true), the suggestion that information like this shouldn't be released because "some" people may misinterpret it is censorship and a concession to stupidity.
The people that are going to complain about gouging and point to this article as evidence would just complain about something else if this article didn't exist. For the rest of us, it gives us a metric we can use to gauge the overall intelligence of our fellow readers! If someone posts comments implying that this article proves Apple is ripping people off - we instantly know that they are either stupid - or trolling - and we can probably safely add them to our ignore lists since it's unlikely they'll ever be able to contribute productively to any conversation!
Well said.
It's also worth noting that no Android maker produces an Apple quality device at $300 with the same silicon in the phone, they even struggle at Apple's price point, which should hint at hidden costs that cannot be quantified, let . Apple spends a great deal of money on research into their proprietary technologies. Their A-series processor R&D cannot be cheap. Their camera optics R&D cannot be cheap. Their 3D Touch R&D cannot be cheap, their iOS design cannot be cheap. They are a company about design, that's where they pay the big bucks. And then there is marketing.
So there's nothing at all wrong with this article. If people read it and ...
You don't seem to have to deal with the trolls much then. They see the number, skim it at best and move on, thinking their beliefs have been confirmed. So "If they read it..." is a contingency that you should know rarely happens.
Your list of potential upsides to having this article at all is pretty thin compared to the down sides, especially compared to the aggravation of having to deal with the haters.
The BOM's are a whole lot more accurate than that article that estimates the body at that low. Heck, break it down to the individual protons, electrons, and neutrons and it's essentially worthless. Use the more biological components and it's in the millions of dollars: http://www.well.com/~justpat/bodyparts.pdf
Comments
Maybe on the MacPro/MacMini it's 20%. I don't see the iMac or Laptops being that low entirely because if you buy all the parts separately (OEM) it still requires assembly, and the store you buy OEM parts from still has their own markup.
Dear IHS,
Thanks for info! Now ....
Why would any of those things be included in "hardware material costs"? The article was very clear that it was the cost of the actual hardware they were reporting/guesstimating on.
Those other costs you mention - while absolutely valid - are fixed costs. They remain the same whether Apple sells 10,000 phones or 100 million phones. The costs reported in this article are supposed to be an approximation of how much it costs to manufacture each phone now that all of the R&D is done.
C'mon now. The underlying motivation of all of these "this is what we think it costs Apple to build an iPhone... blah blah blah" are to paint Apple as a company gouging customers on unit price. To say that fixed costs are independent of whether Apple sells 10,000 or 100 million units is slanting the message towards the disingenuous because these expenses are absolutely factored into the final unit price. Apple's decision to take on enormous R&D expenses like material, tooling, labor, and nonrecurring engineering expenses is based on an estimation by the company that they are going to sell a minimum number of phones in a certain period of time. In Apple's case the sales numbers and rates have to be huge to justify the investment. If Apple "only" sold 50 million 6S products in the first year it would be a disaster, not just a slight hit to their profit margins.
Exactly and to take that further - the 21.5% margin is across the product range, not just the $649 model. So even the people whining that memory upgrades should not be $100 per tier don't get it right. More likely Apple is selling the 16gig model at a lower margin and the 128gig at a higher margin with the mid range being the balance point.
(Disclaimer: I think the bottom tier should be 32gig)
(Disclaimer on my disclaimer: I also think the complainers don't consider that the middle tier is 64gig not 32gig, so really the $100 bump is double the value of what it could be)
(Disclaimer to the disclaimer disclaimer: Have any of these complainers gone out and bought a 64gig micro SDhc for their 16gig Android phone? How much is it eh for a fast and decent quality brand. $100AUD.. yeah........)
sorry got a bit off track there
Exactly. On top of that, NO consumer-grade SD Card is capable of the speed and stability of Apple's internal storage. That's something the Android community just can't understand, even when the hard proof is smacking them square in the face.
The AI writer or IHS? I'm pretty sure IHS is clear about what they're estimating in their report. Blog writers certainly aren't.
Not accounting for research and development, logistics, marketing and other costs, the various chemicals that make up the human body cost about $50 less than the iPhone 6s components.
The AI writer or IHS? I'm pretty sure IHS is clear about what they're estimating in their report. Blog writers certainly aren't.
I am referring to IHS, which only states "numbers do not account for research and development, logistics, marketing and other costs". They are basically giving the wrong idea about manufacturing costs by talking about assembly costs and omitting that those other costs include plenty of manufacturing costs.whining about that’s how much it should cost!
I've never seen anyone post that it should be sold at component and assembly cost. Feeling persecuted? Angry? At an estimate of component and assembly costs? Chill.
I've never seen anyone post that it should be sold at component and assembly cost.
I sure have.
Great news. Can I have a list of the parts so I can get them and build my own??
Sure, but the processor, logic board, and case are proprietary so you will have to CNC your own case, build your own board, and fab your own A9 processor (good luck with that last one). How many tens/hundreds of man-years went into the A9 development?
Why would any of those things be included in "hardware material costs"? The article was very clear that it was the cost of the actual hardware they were reporting/guesstimating on.
Those other costs you mention - while absolutely valid - are fixed costs. They remain the same whether Apple sells 10,000 phones or 100 million phones. The costs reported in this article are supposed to be an approximation of how much it costs to manufacture each phone now that all of the R&D is done.
Actually it does matter how many units are sold relative to those costs, Yes those cost are fix for the time period units are sold over, however, the Margin is directly impacted by how many units are sold. The large number of units sold means the total cost are spread over more units so the cost per unit is less. This is why they can not say for sure what margins will be until the last unit is sold so they can do the math.
But these guys who analyze the cost of parts and that is all they are doing is completely wrong, I personnally negotiate part pricing and know the real cost that supplier sell at and I never seen any of these third parties come close to the real price. I am not talking about being off 1% or 2% they usually off 10% to 20% and they not always off high or low, they off in both directions depending on the part. Our marketing department use to pay this third parties to do teardowns and cost analysis of competitors products then Marketing would come in and say our product cost to much since the third parts claim the competitors make their products for less. When we would do the same analysis with our own database of costs (BTW our purchase volumes were usually much higher than the competitors) we would show they were usually the same cost or a little more using our our pricing.
I've never seen anyone post that it should be sold at component and assembly cost. Feeling persecuted? Angry? At an estimate of component and assembly costs? Chill.
Huh! You hear all day long that Apple is ripping people off because of these piece crap numbers; all day long.
Even if they don't say it should be sold for that, they'll whine that Apple should sell their phone $200, $300 less because not doing so is just... "greedy". Whining for the phone should be $350, is not that much different from saying it should be $250; both are moronic.
Even if they don't say it should be sold for that, they'll whine that Apple should sell their phone $200, $300 less
The original claim was people posted that Apple should sell product at component and assembly cost. I've never seen it. Nobody has posted any links to such posts. I still believe it is an emotional exaggeration.
What you are talking about has little to do with the original claim or my response. Raging against imaginary slights is pointless.
Yes, the detractors don't know what's going on, all said. They don't understand what the numbers really mean, assuming they have any meaning. I really question AI making a story of it at all when they don't bother to address what the numbers don't mean, even if they were correct. The article pointing out the "guestimators" quote is lamp shading the issue, in my opinion.
All this article says is "Now that all of the development is done and paid for and the factories and assembly lines have been retooled to produce this phone - this amount is the amount Apple has to pay to run each phonethrough those assembly lines." So if Apple wants to build 20 million phones of a specific model, they will have to pay "this much" times 20 million for the parts required to do so! The other costs are paid for and budgeted for on different line items internally. It's only when it comes down to calculating margins and overall profitability that those costs need to be spread out over the number of phones actually produced - and it can't be calculated accurately until they stop manufacturing a particular model!
So there's nothing at all wrong with this article. If people read it and think that Apple should be selling the phones for $300 because they only cost $235 to make - then there's something wrong with that person!!! The article provides an interesting (to me) metric which means almost nothing in the grand scheme of things. Assuming of course that the information is accurate (which may not be true), the suggestion that information like this shouldn't be released because "some" people may misinterpret it is censorship and a concession to stupidity.
The people that are going to complain about gouging and point to this article as evidence would just complain about something else if this article didn't exist. For the rest of us, it gives us a metric we can use to gauge the overall intelligence of our fellow readers! If someone posts comments implying that this article proves Apple is ripping people off - we instantly know that they are either stupid - or trolling - and we can probably safely add them to our ignore lists since it's unlikely they'll ever be able to contribute productively to any conversation!
There is nothing wrong with this article the way it is written. The anger on this site seems to have more to do with how some people may interpret it - but the problem lies with the intelligence and comprehension skills of the reader that misconstrues the article than with the article itself! The article is clear that this is a price for the raw components that make up the two new iPhones. It doesn't try to suggest that people are being gouged. Perhaps they should have included a disclaimer that lists some of the other costs associated with putting an iPhone in the hands of the actual consumer - but I don't think that's entirely necessary since it's obvious to most people of average intelligence or better that there are a lot more costs involved than just a basket full or parts. As others have suggested, there are costs associated with retooling assembly lines, assembly line workers, packaging, distribution, iOS, development salaries, prototyping, producing documentation, marketing, accessories, research, sourcing, legal, localization, and probably a dozen more things I haven't mentioned. It's been well publicized that the margin on the iPhones are approximately 35-40%. Many of those costs, as I said earlier are fixed. Of course they need to be recouped out of the sale of the phones - but as the number of phone sold increases, the amount (per phone) that is needed to cover the development, retooling, etc expenses becomes smaller.
All this article says is "Now that all of the development is done and paid for and the factories and assembly lines have been retooled to produce this phone - this amount is the amount Apple has to pay to run each phonethrough those assembly lines." So if Apple wants to build 20 million phones of a specific model, they will have to pay "this much" times 20 million for the parts required to do so! The other costs are paid for and budgeted for on different line items internally. It's only when it comes down to calculating margins and overall profitability that those costs need to be spread out over the number of phones actually produced - and it can't be calculated accurately until they stop manufacturing a particular model!
So there's nothing at all wrong with this article. If people read it and think that Apple should be selling the phones for $300 because they only cost $235 to make - then there's something wrong with that person!!! The article provides an interesting (to me) metric which means almost nothing in the grand scheme of things. Assuming of course that the information is accurate (which may not be true), the suggestion that information like this shouldn't be released because "some" people may misinterpret it is censorship and a concession to stupidity.
The people that are going to complain about gouging and point to this article as evidence would just complain about something else if this article didn't exist. For the rest of us, it gives us a metric we can use to gauge the overall intelligence of our fellow readers! If someone posts comments implying that this article proves Apple is ripping people off - we instantly know that they are either stupid - or trolling - and we can probably safely add them to our ignore lists since it's unlikely they'll ever be able to contribute productively to any conversation!
Well said.
It's also worth noting that no Android maker produces an Apple quality device at $300 with the same silicon in the phone, they even struggle at Apple's price point, which should hint at hidden costs that cannot be quantified, let . Apple spends a great deal of money on research into their proprietary technologies. Their A-series processor R&D cannot be cheap. Their camera optics R&D cannot be cheap. Their 3D Touch R&D cannot be cheap, their iOS design cannot be cheap. They are a company about design, that's where they pay the big bucks. And then there is marketing.
You don't seem to have to deal with the trolls much then. They see the number, skim it at best and move on, thinking their beliefs have been confirmed. So "If they read it..." is a contingency that you should know rarely happens.
Your list of potential upsides to having this article at all is pretty thin compared to the down sides, especially compared to the aggravation of having to deal with the haters.
These BOM's are as dumb and useless as articles about how much elements in our body is worth. About $10.
http://chemistry.about.com/b/2011/02/06/how-much-are-the-elements-in-your-body-worth.htm
The BOM's are a whole lot more accurate than that article that estimates the body at that low. Heck, break it down to the individual protons, electrons, and neutrons and it's essentially worthless. Use the more biological components and it's in the millions of dollars: http://www.well.com/~justpat/bodyparts.pdf