What Do Production Costs Say About Apple’s New iPhones?
According to a new report by All Things D and research firm IHS, Apple’s (NASDAQ:AAPL) new iPhone 5S and iPhone 5C might be more alike than the company would have you think. In fact, the difference in production costs for Apple’s iPhone 5S and iPhone 5C is actually less than the difference in retail price between the two smartphones.
IHS took Apple’s two new smartphones apart in order to compare internal components and the results of its findings seem to show that the iPhone 5S and iPhone 5C are actually much more alike than you’d think. According to IHS data shared with All Things D, Apple’s 16GB iPhone 5S, which features the fingerprint ID system, costs apple about $199 to build while the 64GB model costs about $218. Apple’s iPhone 5C, on the other hand, costs between $173 and $183 to make according to IHS’ research. IHS analyst Andrew Rassweiler says that the production costs are so similar because they really aren’t all that much different.
“I would say that they’re almost the same phone, except that the 5S has the fingerprint sensor, the A7 processor, and some newer memory chips that consume less power.” Rassweiler, who oversaw the teardown research, explained. “Beyond that, they’re basically the same.”
When IHS analyzed the parts in both the iPhone 5S and iPhone 5C, it came to the conclusion that the most expensive components in the two smartphones were the costs associated with the display screens — something that results in a combined cost of $41. According to IHS, the display screen providers are likely to include Sharp, Japan Display, and LG Display (NYSE:LPL).
Apple surprised a lot of onlookers and industry analysts earlier this month when the iPhone 5C was announced at a price-point not so different from the iPhone 5S. While analysts had expected the iPhone 5C to be a much cheaper model of the iPhone, retailing around $300 to $350 without a contract, Apple announced the iPhone 5C at a starting, unsubsidized price of $549 for a 16GB model and $649 for a 32GB model. Apple’s iPhone 5S — the company’s flagship model — costs between $649 and $849 without a contract.