Maxvla
Headphoneus Supremus
- Joined
- Dec 26, 2002
- Posts
- 8,565
- Likes
- 654
Fedex just dropped my iPod off. Perfect timing as I was about to leave for work. Impressions later...
Ijust can't imagine how one would work with a screen that is so small.
Anaxilus said:
If you think all that w/ shipping and packaging and RnD added together adds more than another $50-75 (probably less) per unit you are wrong. The majority of the cost is in the bulk purchase of its parts and the miniscule cost of Chinese slave labor. Believe me, I have a close relationship w/ someone who works at Foxconn. $600-$700 for an iPhone 4 off contract is ludicrous and a pocket liner. You think they are losing money on the iTouch and iPods? They are raking it in hand over fist w/ bigger margins than anybody out there. Its not hard to guesstimate how much that product sitting on a shelf at Best Buy cost to get there.
If you think all that w/ shipping and packaging and RnD added together adds more than another $50-75 (probably less) per unit you are wrong. The majority of the cost is in the bulk purchase of its parts and the miniscule cost of Chinese slave labor. Believe me, I have a close relationship w/ someone who works at Foxconn. $600-$700 for an iPhone 4 off contract is ludicrous and a pocket liner. You think they are losing money on the iTouch and iPods? They are raking it in hand over fist w/ bigger margins than anybody out there. Its not hard to guesstimate how much that product sitting on a shelf at Best Buy cost to get there.
I don't think they're losing money on itouch and ipods; but i don't think that their profit is 75% of their receipts, as all this "teardowns" tends to claim.
Also, what could your relationship with someone from Foxconn say about apple's costs of shipping, packaging, r&d, marketing, web site support etc?
Rather than playing into your red herring lets simplify this for you based on my last argument. Since you haven't actually made a guess as to how much YOU think it costs Apple to put an iTouch on the shelf at Best Buy how about we start there.
We both know they are not losing money selling the iTouch so consider MSRP and teardown costs, what you have left is profit and extraneous expenses you mentioned. Then lets extrapolate the difference for an iPhone. Now show me based on that why you think my guess of $190+$75 for the actual cost of the iPhone would be so wide off the mark.
Apple is a joint stock company, so all the reports are freely available. Wikipedia says that revenue of Apple in 2009 was about $43bln, and that profit in the same year was about $8.2bln, so we could guess (if i didn't mistake all this english accountant terms) that apple's profit for each device is about 20% of the wholesale price.
Again, i don't know what are average retail margins in US, and what is the real retail price of iphone (as it is subsidised), but i'd guess that margins are about 10% (given that manufacturers are selling devices for the same price as independent retailers), and the iphone real retail price is about $600 (given that itouch costs up to $400). So, the approximate numbers are:
1) It costs about $500 for apple to made an iPhone, and about $290 to made an iTouch 64GB (including R&D, marketing, FCC approval etc);
2) Apple sells these to retailers for $630 and $360 respectively, making $130 and $70 of profits respectively;
3) Retailers are selling these to end users for $700 and $400 respectively, making another $70 and $40 of profits.
These numbers are highly approximate, and i didn't take into account that profits for some devices are higher than for another (e.g. looking at the difference in prices of iTouch 8 and iTouch 64, and comparing it to the prices of flash memory, i'd guess that apple makes small or no profits on iTouch 8, but huge profits on iTouch 64).
But it is nowhere close to "apple spends only 20% of the price they get on manufacturing the device", as if it was true, we'd see not 8, but 25bln of profit in 2009.
Oh I guarantee you that is a substantial markup. There isn't even $400 worth of anything in there.
http://news.cnet.com/8301-31021_3-20009027-260.html
I'll go w/ sky high profits for my hypothesis.
You think Apple has significantly more mark up on the iPhone 4 than the iPod Touch? The iPhone actually has competition, while the iPod Touch has practically none. Talk about backwards...
I think that a lot of those hardware margins are generated from the flash memory in the device, as we have pointed out Apple offers as much flash memory as anybody in these devices and a lot of how much they profit off a device like this is how well they do in cornering the market on the commodity memory involved during manufacture of the device in the first place. But yeah the real $ is still in the wireless contracts, that is for sure, and that is the reason that we got the lesser screen/camera and no GPS, in the touch IMO. Without a contract, there just isn't enough margin to support it these features.
There was a very notable source that I read that said the iPhone only costs.... 172 or 182 (can't remember) to make, most of it coming from the Retina display. It isn't even over 200. You're paying some serious Apple Tax brother.
That wasn't my point. I was talking about the % markup between the iPhone and iPod Touch.
Also, on topic of the quote, remember that a product like an iPod Touch or iPhone is more than it's parts.
Just ordered my ipod classic since nothing new was on the horizon. No interest in the other models. Storage is king!