iPhone SE Component Costs Estimated to Start at $160

Monday April 4, 2016 10:58 am PDT by Juli Clover
Component costs for the new 16GB iPhone SE are estimated to be at about $160, according to a preliminary teardown report from IHS iSuppli. When a new iPhone is released, IHS often takes it apart to estimate the cost of each component to ultimately predict how much Apple spends on hardware.

IHS estimates that the materials for the device cost $156.20, rounded up to $160 with the addition of manufacturing costs. Apple is believed to have kept the base cost of the iPhone SE relatively low by using a number of parts designed for the iPhone 5s, 6, and 6s, allowing the device to be sold to consumers at a $399 starting price due to price drops on the original components.

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For example, the Gorilla Glass display in the iPhone SE is estimated to be one of the most expensive components, coming in at a price of $20. When that display was originally used in the iPhone 5s, it was more than twice as expensive. When the iPhone 5s was released in 2013, in fact, its costs were estimated to be at $199 and with Apple's most recent flagship iPhone 6s Plus, component costs were estimated to start at $236.

When it comes to the 64GB iPhone SE, IHS estimates that Apple is making an additional $89 per device over the 16GB iPhone SE, due to the relatively low cost of memory upgrades.
"Apple is willing to drop its gross margin on the low end to induce sales -- though it is likely counting on many consumers upgrading to the more profitable 64 gigabyte SE model," said Wayne Lam, principal analyst, mobile devices and networks, IHS Technology. "When the profit machine that is Apple capitulates to the market forces of a maturing industry, it shows its tacit acknowledgement that even it is not immune to the dynamics of the global smartphone slowdown."
IHS' component cost estimates look at the potential price related to each individual component in a device without taking into account other expenses related to product creation like research and development, advertising, software, and distribution, so while interesting, the estimates are not a useful tool for determining Apple's actual profit margin. An earlier report from CNN suggested the iPhone SE components have a total cost of $220, but IHS has a longer history and more experience with component pricing estimates.

In the past, Apple CEO Tim Cook said that component cost breakdowns on Apple products are inaccurate. "There are cost breakdowns around our products that are much different than the reality," he said. "I've never seen one that is anywhere close to being accurate."

Related Roundup: iPhone SE 2
Tag: IHS iSuppli
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bbeagle
50 months ago
Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.
Rating: 34 Votes
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Oblivious.Robot
50 months ago

And then you have Jony's big bonus to think about :D


Oddly, that's the one thing he won't like to be thinner! :p
Rating: 20 Votes
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2457282
50 months ago

Bottled water components cost $0. They sell it for $1.59.

Component costs never tell the true story.

Agreed. The cost of the OS and software need to be include. Plus shipping. Plus advertising. And then you have Jony's big bonus to think about :D
Rating: 13 Votes
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Bubba Satori
50 months ago
Why are so many people upset when these estimates come out?
Rating: 8 Votes
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brewmonkey
50 months ago


In the past, Apple CEO Tim Cook said that component cost breakdowns ('https://www.macrumors.com/2015/04/27/apple-product-component-cost-breakdowns-inaccurate/') on Apple products are inaccurate..."I've never seen one that is anywhere close to being accurate."


Probably a little bit of grandstanding with that statement. Of course we can't know exact details of Apple's contracts, but supply chain analysis is neither new nor rocket science. They're not posting the highest profitability of any company on earth on grocery store margins. ;)
Rating: 6 Votes
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dannyyankou
50 months ago
When people complain about component costs compared to the actual product, it reminds me of on Pawn Stars when they bring in an expert to say what something's worth, then they offer half of that. Like people expect them to buy and sell stuff without making a profit.
Rating: 5 Votes
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dannyyankou
50 months ago

Another meaningless component estimate analysts that Tim Cook has said is meaningless. How in the world would any of these firms know what component costs are for Apple? It's not like Apple is just buying stuff off the shelf at market price. Also the price of any product goes beyond what the individual components add up to.

Even if the estimate is accurate, who cares? Let Apple charge what they want. If people don't like it, don't buy it. Let the free market play out.
Rating: 4 Votes
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kdarling
50 months ago

There is a basic reason for the storage prices:
The 64/128 buyers are subsidizing the 16GB buyers.

What would happen if Apple applied the same profit margins on all phones? What would the prices look like? Is that what you want? We all know the additional memory only cost about $20 more. So if Apple got the same profit margin on all models the prices would look like this:

16GB iPhone $750
64GB iPhone $790
128GB iPhone $810


What ratio of 16/64/128 buyers are you using in your calculations?

Component costs are useless. Especially when these articles have ZERO idea how much Apple is paying for these components.


That's a bit over dramatic. They of course have more than a "zero idea".

Its pretty obvious what these articles are trying to do: Show that Apple is ripping off customers.

If not why don't we see these same type of articles about Samsung phones? Or other Android phones?


BOM estimates are also reported for major Android phones from Samsung, HTC, etc.

We just don't hear about them on an Apple fan site.

Apple's profit margin is 21%


That's over all their products including Macs, not their net profit margin on iPhones, which is reportedly closer to 30%.

Look at reality. All those Android phone makers are going bankrupt or make very little profit at all. Even Samsung has its profits drop 80% the last couple of years.


Even at that, Samsung mobile is still taking in billions of dollars a quarter. As people are fond of saying here, I would love to have their income problems :)

Apple makes about 90% of smartphone profits while only selling 15% of the phones. That alone should tell you those Android makers will be bankrupt, just a matter of time.


Smaller phone makers have gotten by with under 10% margins for years. So have many other factories. Heck, Foxconn's profit margins dropped down around 3% because of Apple for many years.

And if a company is inches away from bankruptcy you think they have money to spend on R&D? Hire and keep the best talent? Offer great customer service? Of course not. When a company is on the verge of bankruptcy they cut corners and the customer loses out.


Yet we also see Apple cutting corners on their own devices.

You also fail to account for the costs of creating and maintaining iOS. No Android manufacter has to pay BILLIONS to keep Android up to date and adding new features. That is a massive expense.


Strawman. Apple doesn't pay BILLIONS to keep up iOS.

And the major Android phone makers actually employ quite a few people to customize and maintain their own Android implementations.
Rating: 3 Votes
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MrGuder
50 months ago
Should we all return it because Apple makes a profit? Unless you are using an SE you won't realize how great this product is...it one fast beast and it finally packs a battery to last more than a day and then some. It does everything it claims to be and is a great value price wise just wish it came with 128gb.
Rating: 3 Votes
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kdarling
50 months ago

Who the hell had multi-touch on a phone before Apple?


Your posts demonstrate an all too commonplace ignorance of smartphone history.

Apple was the first to mass produce such a phone, but they weren't the first to publicly reveal one.

By 2006, multi-touch and capacitive screen phones were being publicly demo'd and proposed for sale, and finger friendly UIs (including pinch zoom) were predicted to be the coming thing for the next year. This very likely influenced Jobs' desire to show off a (barely working) production iPhone model in early 2007.

Samsung didn't copy the iPhone design? Look at exhibit A.
Denying Samsung didn't copy iPhone design is ridiculous


That was the cherry picked limited set of images that Apple's lawyers used. They fought to prevent the jury from seeing Samsung's more complete before-after picture:



If Apple had been confident that it actually invented something unique, their lawyers would not have been so fearful of letting the California jury see all the evidence and letting them decide for themselves.

However, all this prior art was NOT banned from appellate court judges, who were the ones who repeatedly knocked down Apple's attempts to get an import ban on Samsung, AND removed half the jury award due to Apple's claimed trade dress being invalid over functionality.

Home Button on iPhone. Samsung ripped that off right from the iPhone.


Having a large central button was a primary Samsung design trait long before then. And the iPhone's was not oblong like Samsung's.

Retina. iPhone was the first smartphone to offer that level of resolution.


The Toshiba Protege was the first smartphone with >300 PPI screen. It came out about the same time as the first iPhone did in mid 2007.

It and similar high DPI smartphones are why Jobs felt compelled to make up a new marketing term ("retina"), since the more commonly used "print quality display" definition using the same math had already been used in smartphone ads years before Apple finally did one.





Rating: 3 Votes

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