Thursday, October 1, 2015

The True Cost of Apple's Latest iPhone 6S Smartphones

Photo Credit: IHS

Last weekend, Apple sold an record of 13-million units of their latest iPhone smart device. In many stores across the world, first examples of the Apple iPhone 6S and iPhone 6S Plus were promptly snatched-up by mobile technophiles. Featuring many operational upgrades over the previous device such as 3D Touch, the new edition iPhones are also equipped with a more power A9 processor, 12-megapixel and 5-megapixel cameras as well as a lighter, more efficient battery.

The rite of passage to Apple's new normal in mobility requires buyers to part with $649 US ($899 on the Apple Canada website) for the 16-gigabyte iPhone 6S. For $749 US or $1,029 Canadian, the Apple iPhone 6S Plus can fit in your pocket (providing it is a large enough pocket to fit the 5.5-inch touchscreen smartphone). Parting with a considerable amount of money for what is the Apple lifestyle, this movement obviously benefits the bottom line of a technology company ranked as the richest corporation in the world. Services such as iTunes, App marketplace and their new music streaming service are seen as market-leading cash cows succeeding in giving people hooked to their brand. However, it's also intriguing to note the amount of money Apple makes off the devices themselves.

Exactly how much does Apple stand to make with every latest generation iPhone sold? A recent report shared by information and analytic company IHS has shed some light on the actual cost of the new phone's hardware providing some level of insight to the profit margin of the iPhone 6S and iPhone 6S Plus.

According to IHS, the total cost of producing an 16-gigabyte Apple iPhone 6S Plus is $236.00 ($231.50 for the components and $4.50 for the assembly per device). Compared to the previous iPhone 6 Plus, the new version cost $16 more. Roughly $10 to the bill of material cost for the new iPhone is associated with the new Taptic Engine used to reproduce a sensory feeling when the device is touched. The following illustrates a partial breakdown of costs attached to manufacturing the latest smartphone:

Highlight Hardware Costs for Apple iPhone 6S Plus:

5.5-inch touchscreen hardware with Retina Display: $52.50
Apple A6 64-bit processor: $22.00
16-gigabyte flash memory storage: $5.50
Li-Polymer battery: $4.50
Front and rear cameras: $22.50
Wireless/Bluetooth Technology: $6.00

Referring the 16-gigabyte flash memory storage unit (supplied by top-ranked Korean tech company SK Hynix) above, The IHS report states production of a 64-gigabyte iPhone 6S Plus is just $17 US more per device. Interestingly enough, when the 64-gigabyte Apple iPhone 6S Plus lands in retail environments, the cost difference is $100 US.

Keep in mind, the costing report leaves out one item that is pivotal to any Apple device. The development costs of the software, including the IOS 9 basis for the smartphone.

In the case of automobiles, buyers can often use the differential between the dealer invoice and the MSRP (Manufacturer Suggested Retail Price) to negotiate a purchase price. Even though the Apple iPhones feature mobility as well as a high cost, tech-savvy buyers have no hope applying any money-saving buying strategies.

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