iPhone 7 and iPhone 7 Plus has arrived and we may say that it has somewhat lived up to the hype it created before the launch. The same can be evidenced by the sales figures for iPhone 7 and iPhone 7 Plus released by Apple. The new iPhone 7 Plus seeks to revolutionize the smartphone industry with it 3.5 mm headphone jackless feature.As with previous iPhone versions, there have reports of Apple fanboys queuing up in front of stores for the launch. One such fan reportedly sat in the rain for 18 hours to buy the new iPhone 7. It is not known whether there is any truth in the story or it is a planted one to drive up the iPhone 7 craze among buyers.
A single piece of iPhone 7 is being sold to buyers for $649 for 32GB version. What does it really cost Apple to make one piece of iPhone 7?
According to IHS Markit, the total cost to produce a single iPhone is $224.80 which is incidentally, $36.89 higher that the iPhone 6s. And it is marketed by Apple for$649 for the 32GB version. Which means that Apple is charging you 3 times the manufacturing cost. In some places like China and India the prices is even higher, going up to four times the manufacturing cost.
The IHS Markit report states that the new iPhone 7’s Bill of Materials (BOM), a financial estimate of the raw materials used, was “in line” with flagship smartphones made by rival Samsung but Apple saves a lot more on better margins.
Andrew Rassweiler, senior director of cost benchmarking services at IHS Markit said “All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past”
Do remember, the above price is the margin on iPhone 7, Apple may be making more on iPhone 7 Plus as IHS Markit has not done a teardown analysis on it. Add to that, Apple earns handsomely through accessories such chargers, earphones, etc. in addition to its earnings from iTunes store.
No wonder Apple is sitting on a cash pile that is more than GDP of countries like Pakistan, Iran etc.