[That report is] BS. The box and box contents (charger, headphones) are eight bucks. Total BOM and manufacture costs for iPhone 5 ranges from $207 to $238 according to iSuppli's analysis. iPhone 4s BOM+manufacture costs run from $196 to $253. This is just the hardware components. It does not include software, licensing, royalties, advertising, shipping, and so forth.
Welcome to the modern "news reporting" where journalistic integrity and basic fact-checking take a back seat to hype and ratings.
Moderator's note: I copied this post from another forum I read, with the kind permssion of Mr. Braun.
I saw the Obama administration weighed in on one aspect of affordability this week: after another government agency declared that lawsuits by carriers against consumers who unlock their under-contract phones can go forward, the Administration accepted an online petition protesting such policy and declared that such lawsuits are lunacy. Net effect: zero.
Sometime last year a major news organization (I think it was ABC) announced that the build cost of an iPhone is US$8, which if true means the markup is over 98% of the inflated price. Last week's Time magazine devoted its entire news section to a single 24,000-word piece about the so-called chargemaster, which is the computerized price list used by hospitals to compute bills.
Welcome to the modern price-gouging economy. Profiteers are finding ways to corner many markets and jack up prices by ensuring that consumers pay for things indirectly, blunting the effects of comparison-shopping.
If you want better/cheaper mobile phones and service, alas you have to escape the boundaries of the USA to get beyond the reach of profiteers.
-rich
Well, it's not true, so we can stop you right there. Only a modicum of common sense should be necessary to raise one's skepticism alarms at such a claim. It's true that Apple is very successful at negotiating great prices from their suppliers (in part due to the huge volume of parts they buy), but do you really believe that Qualcomm will sell them the radio DSP or that Samsung will part with an A6 CPU for only a couple of bucks? And then there's the cost of the RAM, the flash memory, the Gorilla Glass, the case, etc.
I suspect you are referring to a story like
"Whereas last year's 4S cost $188 in parts, plus an $8 "manufacturing" (labor) fee, to bring to a total of $196 (for the 16GB model)-the iPhone 5 costs $199 in parts and $207 after the manufacturing fee."
In other words, the $8 is what Apple pays to Foxconn, et. al. for assembling the device from its component parts, not to what Apple pays to its various suppliers for the parts themselves.
If you don't like the price, you don't have to buy. Thank goodness that in MOST of our economy, the government isn't holding a gun to anyone's head, forcing either a customer to buy something at a certain price or a business to sell something at a particular price. In parts of the world where governments do such things (often in the name of preventing "price gouging"), the result can get ugly. By dying yesterday, Hugo Chavez managed to escape having to deal with the consequences of the price controls his regime has dictated for items ranging from food to appliances -- empty shelves and an inflation rate rising almost as fast as the violent crime rate.
As for comparison shopping for phones: have you been in a phone store in the last several years? The 2-year contract model with a subsidized upfront initial purchase cost is almost universal for post-paid service now, which makes it very easy to compare the carriers against each other. If you don't want the commitment of a contract, you can use a pay-as-go service (prepaid wireless) instead, but you have to be prepared to buy the device up front, without a carrier subsidy. This model is more popular in other countries than in the US, but there are some customers here who choose it too. To continue with the iPhone example, Straight Talk Wireless at Wal-Mart offers unlimited service for $45/month if you buy an iPhone 5 for its full $649 cost (the same price that an unlocked, contract-free iPhone 5 can be had for at a US Apple store).
Are you implying that carriers in other countries aren't out to make a profit? And guess what, if you want to buy an iPhone 5 with no contract (and thus no carrier subsidy), you are not going to find it for much less than that $649 price anywhere in the world. You might pay substantially more; that same model costs £529 (GB Pounds) at Apple stores in the UK, which works out to $801 at current exchange ates. In Germany, it would set you back 679 euros, or $882. Of course, there are plenty of competing smartphones out there to tempt you if you don't want to pay for an iPhone.
Bob Goudreau Cary, NC
***** Moderator's Note *****I'm thinking of changing the Digest's "official" character set to UTF-8, since ISO-8859-1 doesn't have a Euro sign. Opinions?
Bill Horne Moderator
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