Apple reaping higher profits from each iPhone X sold than iPhone 8, analysis claims
Despite the expense of technologies like a 5.8-inch, edge-to-edge OLED display and a 3D facial recognition camera, the iPhone X is actually more profitable per-device than the iPhone 8, according to a research estimate published on Monday.
The 64-gigabyte iPhone X costs about $357.50 to make, giving Apple a 64 percent profit margin on a $999 pricetag, TechInsights said. The figure is based on a parts calculation during a teardown.
An equivalent iPhone 8 sells for $699, but is said to have a margin of 59 percent.
The discrepancy is significant because unlike the iPhone X, the iPhone 8 is relatively modest evolution of the iPhone 7. It does include a number of changes -- like Qi wireless charging, an A11 Bionic processor, and some camera and display upgrades -- but it otherwise shares the same form factor, and continues to use LCD instead of OLED, plus Touch ID instead of Face ID. The switch to a glass back was made to support wireless charging.
The X's OLED display and linked parts are estimated to cost about $65.50, versus $36 for the 4.7-inch LCD assembly on the iPhone 8. Another pricey item is the X's stainless steel chassis, said to be worth $36 versus just $21.50 for the frame on the iPhone 8.
The use of stainless steel is one separator of prices with the Apple Watch Series 3 -- while LTE models with aluminum and Ion-X glass start at $399, choosing steel and sapphire instantly raises prices by $200.
Unaccounted for in the TechInsights research are expenses in research, development, manufacturing, and marketing.
The 64-gigabyte iPhone X costs about $357.50 to make, giving Apple a 64 percent profit margin on a $999 pricetag, TechInsights said. The figure is based on a parts calculation during a teardown.
An equivalent iPhone 8 sells for $699, but is said to have a margin of 59 percent.
The discrepancy is significant because unlike the iPhone X, the iPhone 8 is relatively modest evolution of the iPhone 7. It does include a number of changes -- like Qi wireless charging, an A11 Bionic processor, and some camera and display upgrades -- but it otherwise shares the same form factor, and continues to use LCD instead of OLED, plus Touch ID instead of Face ID. The switch to a glass back was made to support wireless charging.
The X's OLED display and linked parts are estimated to cost about $65.50, versus $36 for the 4.7-inch LCD assembly on the iPhone 8. Another pricey item is the X's stainless steel chassis, said to be worth $36 versus just $21.50 for the frame on the iPhone 8.
The use of stainless steel is one separator of prices with the Apple Watch Series 3 -- while LTE models with aluminum and Ion-X glass start at $399, choosing steel and sapphire instantly raises prices by $200.
Unaccounted for in the TechInsights research are expenses in research, development, manufacturing, and marketing.
Comments
https://www.google.com/amp/s/9to5mac.com/2017/09/18/iphone-x-costs-profit/amp/
says components cost $581 in 64Gb X
I guess tech tech bloggers can say so many wrong jig things over and over and still has a job. I guess sometimes me has to feed the appetite of “bad Apple news” of the haters.
I just wish wish I had more money when the stock was lower.
Even if the margins were the same or slightly lower than the 8, Apple would still make more profit. Did I miss something?
News Alert: Apple makes more profit on the $1200 phone than the $800 phone.
Next up, Apple makes more profit on a Mac Pro than a Mac Mini.
This can’t be allowed! Android wouldn’t do this to us! Journalists/analysts should have licenses that can be revoked for being dumb or lying.
Nope, that’s just a guess at the cost of component parts - it costs more to actually engineer and assemble. Then you have to package, distribute, advertise, retail, etc
Actually it was reported last month that the OLED screen cost Apple well over $100, now these people say about $65. The guesses are all over the place!
A true and accurate determination of Gross Margin is rooted in the detail. And, that detail is simply not available to an outsider.
In addition, it is not black and white: What you include as cost is, to a large extent, a judgement call.
For instance: if you were calculating the operating cost of a car, would you include the insurance premium? There is simply no one correct answer to that question -- you could argue it either way. But, when making comparisons (such as iPhone vs Galaxy), consistency is critical.
Another example -- perhaps more relevant to the iPhone is employee education: if it is directly related to product then it could be deemed a direct expense of manufacturing. If it is however an education subsidy for attending college it could be considered overhead and not impact Gross Margin at all.
An outsider simply does not have access to the detail necessary to make valid determinations of Gross Margin.
Apple never really changes its prices after release so you'd have to both have a very good idea of supply for a whole year ahead and be sure that demand wouldn't outstrip it. Quite a dicy move.
Price it too low and you depress 8 sales and can't serve X sales and leave opening for competition.
price too high, depress initial and late X sales, people think you're gouging, leave opening for the competition.
With a desirable product, and a public that usually is faithful to the brand, skewing on the high end of the safe pricing zone is probably best.
You're leaving a bit of money on the table (causing your not maxing out the supply for the whole year), but insure your product can be delivered within a reasonable time frame.