When you go to buy a new phone, manufacture costs do not often cross your mind. Well, if you’re planning to buy the new iPhone 7 or iPhone 7 Plus, you might want to take these into account as, in comparison to its predecessor, the iPhone 6s, you’re gaining more value for your purchase. Why? It’s all about manufacturing costs.
The components that Apple uses for the iPhone 7 have resulted in an increase in manufacture price compared to the previous iPhone due to new features, including a bigger battery and larger storage capacity. It is also thought that the iPhone 7 Plus will be more expensive to produce as a result of its larger 5.5 inch LCD screen and the complex dual-camera system.
The IHS information bureau has estimated that Apple’s bill of materials for a 4.7-inch iPhone 7 with the base 32GB storage is $220.80. If we take into account the price of an iPhone 7 on the market ($649 for 32GB) then it is still making a profit of around $250 per iPhone- better than its closest competitor, Samsung.
If we also compare manufacturing costs within the oligopolistic smartphone market, Apple’s Bill of Material costs (that is, a financial estimate of the raw materials used), almost match those costs incurred by Samsung. But Apple may have the edge in the market following rough times for Samsung after its 1 million-phone recall; analysts predict that this could cost them around $904 million. Such a recall comes as a result of Samsung’s accelerated development cycles and hence less stringent quality testing, in a bid to compete with Apple. However, following a shortage in the Apple iPhone 7 jet black colour, Samsung will be encouraged to increase its supply to fill the empty hands of Apple customers which may offset some of this loss.
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