Apple may be struggling to meet demand for the iPhone 6 Plus, but the effort will be worthwhile according to some number-crunching by IHS cited by Bloomberg: it makes an extra $84.50 in profit on the larger model.
It costs an additional $15.50 to make the larger iPhones, according to a breakdown by researchers at IHS, but the sticker price is $100 higher than the iPhone 6 […] The main difference in cost between the two phones comes from the supersize screen, which adds $7.50 to Apple’s production cost. The camera and battery subsystems also cost slightly more.
While everyone doing these analyses seems to come up with a different set of numbers (none of them having access to the actual deals negotiated by Apple so having to rely on a whole bunch of assumptions), everyone seems to agree that margins are significantly higher on the iPhone 6 Plus.
Samsung is said to be so worried by record sales of the new iPhones that it has brought forward the planned launch of the Galaxy Note 4 to September 26th, the same day Apple puts the iPhone 6/Plus on sale in 20 more countries.
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The idea of this isn’t very surprising given the margins they place on flash from tier-to-tier.
Final retail price of manufactured products needs to be a minimum of three times that of the manufacturing process. This accounts for other costs of selling a product such as R+D, tooling, transportation, labor, inventory control, packaging, import/export costs, retail operations, management, support, customer service and of course profit. If this is only parts cost, and haven’t included labor then that seems to be close to in line with typical markup to bring a product to market.
That rule of thumb may be true Jason, but this is being compared to the iPhone 6. So I think we should assume that the labour costs are similar across both models. Like OneOkami said, Apple does the same thing with storage. And that’s fine, it’s business.
Labor costs may be similar, but the 6 Plus had a lot more R+D. With the 6 Plus the OS had to be changed to support a 3x pixel multiplier. It had to be able to scale older apps to the new resolution. Springboard (the icon launcher) allows for landscape, which also makes folders work differently. Quite a few of the built-in apps (Mail, Messages, …) provide a split screen in landscape. And all this engineering had to be tested.
So the R+D figure in this case is a lot more than just hardware R+D, finding a screen manufacturer and retooling the production line.
parts only, and we’re assuming IHS is anywhere close.. For some reason, I find it hard to believe that the larger screen, larger battery, the added OIS part and larger Unibody equate to only a $15 difference.
It should be noted in this article that IHS is only ESTIMATING.. they have no insider info on this nor the cost of Apple’s new duel display pixels for it’s displays or the camera’s cost of the new sensor with focus pixels.. because no one in the market has these things except Apple, so I question IHS having any clue as to their costs.
Which brings me back to.. it’s a guess on their part.
“none of them having access to the actual deals negotiated by Apple so having to rely on a whole bunch of assumptions”
Whats the point in publishing a wild guess?
IHS = Generally fabricated BS. They’re the new iSuppli – a joke.
Yes because everything can be measured in parts cost LOL!
R&D isn’t free