Earlier this year Samsung overtook Apple to become the highest revenue earner among smartphone makers from device sales. This is after Samsung sitting on top of the market in terms of number of sales for more than a year. That it took Samsung so long to dislodge Apple from its perch shows how well the Cupertino company’s high-margin game worked. But if booming sales of the iPhone 5c and 5s are any indication, Apple may regain its top spot soon enough.
An Associated Press report based on a teardown of the new iPhones by IHS Inc reveals that the total production cost of the iPhone 5s is $198.70, while it costs Apple $173.45 to produce each iPhone 5c. In comparison, the iPhone 5, which internally is more or less the same as the iPhone 5c, cost $197 to make. The production cost of the iPhone 5s seems like a coup considering it features smartphone-firsts such as a 64-bit apps processor and a fingerprint identification sensor. Of course the big change in iPhone 5c’s lower production cost is thanks to the cheaper plastic enclosure.
Earning the big bucks for Apple
But consider this: The 5c has a starting sticker price of $549 for an unlocked handset, while the 5s is priced at $649 unlocked. So Apple is making a huge chunk of profit on every iPhone sold. It must be kept in mind that IHS’s figures are an estimate based on a teardown of components, but does not include any administrative, regulatory and taxation charges that Apple would have paid towards each phone. Even accounting for them, Apple stands to make a healthy profit on each new iPhone.
Like we said yesterday, more companies need to follow the example of Fairphone, the Dutch company which published cost specifics for each stage of production of their smartphone. Unfortunately, not all companies are in the habit of revealing this, so we only have this estimate to go on for the iPhones.