As reported by Reuters, tech site TechInsights has analyzed the iPhone X and its components, and says that Apple stands to make $367.50 on every iPhone X sold at the base price of $999. That equates to a margin of 64 percent, and thats’ just for the base model.
That’s from one source. Another report from research company Susquehanna International Group, as reported by WSJ in September this year, shows that the total cost of the iPhone X components is $581, implying a margin of $418, much higher than the TechInsights number. But the earlier number did not account for assembly, marketing, administration and retailing costs.
What’s clear despite the discrepancies is that Apple is obviously paying more to have each iPhone X made and put into the hands of customers. In comparison, iPhone 8’s bill of materials shows the cost as $247.51, per estimates by IHS Markit
It’s iPhone 7 that broke the $220 barrier for BOM and manufacturing costs last year, and iPhone 8 has taken that up a notch, with iPhone X exceeding all past costs.
How Much Does an iPhone X Really Cost to Make? And How Much is Apple Making per iPhone X Unit Sold?
Most of these estimates – if not all – are actually way off, since data from companies like IHS Markit and TechInsights don’t take the overall cost into consideration. For example, they’re not counting software development, design costs or advertising and distribution in their calculations, among other things.
There are also expenses that can’t be tied down directly to the cost of making an iPhone X, or any iPhone or Mac or iPad, for that matter. Like air conditioning, or the CEO’s salary or how much Apple pays to keep its facilities in good repair.
Does that mean Apple is making very little in profits from iPhones? By all measures, absolutely not. Apple is the most profitable smartphone maker in the world, taking an eye-popping 91% of all smartphone profits from around the world, as of 2016 data.
There’s nobody that can compete with Apple in terms of profitability in the smartphone segment, not even Samsung.
But that also paints a bleak picture for other smartphone makers around the world, most of whom are bleeding money, until they either run dry and have to shut shop or be bought over just to stay alive.
Regarding iPhone X cost estimates and profit margins for iPhones in general, here’s what Apple CEO Tim Cook has to say:
“Generally, cost breakdowns that come out around our products are much different than the reality. I’ve never seen one that is anywhere close to being accurate. And so if that’s the basis for your comment, I’d really dig on the data if I were you.”
And there you have it, straight from the horse’s mouth. Everybody wants to know, but Apple won’t tell.
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Source: Reuters , IHSMarkit, IBTimes, Fortune, TechInsights
