Apple is a renowned electronics brand and it has its own unchallenged pricing strategy. Everything from Macbooks to iPhones and iPads are priced exorbitantly. The latest iPhones, the iPhone 6S and iPhone 6S Plus, follow the company's unique pricing ideology, which has no regard for the competition in the market. Despite steep price tags, Apple has a strong fan following around the world. But is Apple really charging right for its devices, especially the new iPhones? Renowned analysis firm IHS has an answer to that.
In an iPhone 6S Plus teardown analysis, IHS found that the manufacturing cost of the new 5.5-inch iPhone is roughly one-third of the $749 selling price. The research firm carefully disassembeled an iPhone 6S Plus piece by piece to get a closer look at the components and individual costs. According to the teardown, Apple spends $236 to make an iPhone 6S Plus, which it sells for $749 in the US.
This shows Apple's dominance over the premium market and confidence to overly price its products while other smartphone makers struggle to sustain the competition.
IHS broke down the cost of the each component, which is as follows:
- 3D Touch display - $52.50
- Camera sensors - $22.50
- 16GB NAND flash memory - $5.50
- Apple A9 processor - $22
- Baseband - $13
- RAM - $17
- Battery - $4.50
- Electronics, PCB, antennas and other mechanical and electro-mechanical equipemnts - $42
- WLAN module - $6
- UI, audio codec and sensors - $18
- Power management Ics - $9.50
- RF transciever and PA - $15
- Assembly, test and insertion costs - $4.50
- Packaging, charger and box contents - $4
The teardown reveals NAND flash memory is one the cheapest components in the iPhone 6S Plus, but Apple charges a premium price for upgrading to higher storage. The new iPhones come in 16GB, 64GB and 128GB options, where Apple charges $100 for upgrading to the next storage model.
"NAND Flash is now so cheap it's almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step up in memory capacity," Andrew Rassweiler, senior direct of cost benchmarking services at IHS, said in a press statement. "For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but Apple charges iPhone buyers $100 more for the increased memory. This is part of Apple's ongoing strategy to improve profits by selling a product mix that is heavier in the higher-end iPhones."
