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iPhone 5S costs Apple just $199 to make


DKT27
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The iPhone displays cost Apple the most, making up $41 of the total bill, according to IHS.

Back when the iPhone 5s and 5c rumor bonanza started (you know, when dinosaurs were still around), basically every insider, tipster and pundit out there claimed to have it on good authority the latter was Apple’s first ever low-cost smartphone.

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Which made sense, since Cupertino continues to be making boatloads of cash, but is not that popular in the so-called emerging markets, where budget-friendly handhelds rule. Only the iPhone 5c didn’t exactly end up being affordable. Not even close.

Sure, it’s not as costly as its all-aluminum sibling, but at $549 outright it’s, for instance, pricier than Sony’s Xperia Z. Not to mention only a couple of bucks cheaper than the HTC One and Samsung Galaxy S4.

When asked about all this and the two new phones’ positioning in the smartphone market, Tim Cook being Tim Cook gave a fairly predictable answer: “We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience. (…) There’s always a large junk part of the market. We’re not in the junk business.”

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Is that so? Interesting. Only it’s not true. It’s not that you couldn’t have made the 5c available at a lower price because it’s soooo great. You didn’t want to because you’re greedy, just like you don’t want to lower the pricing bar of the high-end iPhone.

My proof? According to an IHS report that’ll be published in full tomorrow, the iPhone 5c’s bill of materials is evaluated at $173 and up, whereas the 5s costs $199 to make in its 16 GB version. Intriguingly small gap between the two, but at the same time I think we can all agree both new iPhones could cost much less than $549 to $649 and $649 to $849 respectively.

Oh, and about that “junk” reference, you might want to know Samsung spends roughly $236 on Galaxy S4’s manufacturing, also according to IHS. Granted, the quality of a device doesn’t rely solely on manufacturing costs, but Tim Cook might want to think about getting down off that high horse of his and understand once and for all the Android threat is very much real for his precious, quality, non-junk iPhones.

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It is incredibly naive to think the cost a product can simply be based on the cost of the components. Design costs money, advertising costs money, running stores costs money, software development costs money, quality control costs money - all of these things need to be taken into account.

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