The newly released iPhone XS and iPhone XS Max are now beginning to find their feet in the smartphone market. While the price of iPhone XS and iPhone XS Max has been a point of debate so far, it’s is interesting to find the cost of iPhone XS Max to understand what it takes for Apple Inc. (NASDAQ:AAPL) to market and pocket. Thanks to the recent revelations from Techinsights, we get a lot more insight into that very aspect.
The Real Cost of iPhone XS Max
TechInsights is an Ottawa Ontario based firm which specializes in dismantling smartphones and analyzing its components. They provide an approximate manufacturing cost of the smartphone and the iPhone XS Max underwent the same process. The firm reported that for 256 Gb variant, the total cost of iPhone XS Max clocks around $443, which includes all the parts and assembly cost as well.
Out of all the components, it was the 6.5 inch OLED display which took a major chunk of the cost of iPhone XS Max. According to the report, the display of iPhone XS Max alone cost Apple about $80.50. Other costs which made up the $443 include the smartphone’s processor and modem chips.
Apple decided to venture into new chip-making techniques with Intel Corp (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Co. Ltd. This allowed them to increase their performance while taking up the same amount of space. However, the new modem chips have come under public scrutiny lately, with complaints from new adopters regarding Wi-Fi and LTE connectivity issues.
iPhone XS Max vs iPhone X
When the cost analysis of the iPhone XS Max is compared with the same of iPhone X, there were many interesting learnings. The erstwhile iPhone X cost around $395 in parts and assembly costs. The 5.8-inch display of iPhone X cost Apple an estimated $77.27.
When compared to the huge 6.5 inch OLED display of iPhone XS Max, the iPhone X display does seem quite small. But surprisingly, the iPhone X display costs only about $3 lesser than that of the iPhone XS Max to make. This is a relatively marginal increase in cost with respect to a relatively large increase in screen size and quality.
When quizzed about it, TechInsights revealed that Apple has removed a few components in the new models which contributed to the ‘3D touch system‘. These new components would have cost around $10 more. This would have taken up the cost of iPhone XS Max’s display alone past $90. However, Apple refused to comment on the above information.
Cost vs Price of iPhone XS Max: Profit Guaranteed
The seemingly exorbitant pricing strategy adopted by Apple has always been questioned by users and reporters alike. It is also believed that Apple is, in fact, trying to tackle a global smartphone industry slowdown through its policy of raising iPhone prices, offering new digital services and maximising profits from each component. When questioned about the exorbitant pricing of the new iPhones, Tim Cook defended it. He stated that they were trying to make “an iPhone for everyone“. He further went on to talk about the value brought into play through their products.
Not sure what Tim Cook was up to with his statement on price, but the huge difference between cost and price of iPhone XS, indicates that Apple is no mood to compromise with its profit margins despite the slowdown in the global smartphone industry. It’s reported that Apple secures 40% – 42% as a net profit margin from the sales of each iPhone unit. The increasing competition is forcing Apple to invest more money in branding and advertising of iPhone which may have a direct impact on the company’s profit margin on iPhones.
Whatever may be the situation, it would be interesting to see that with such a difference between cost and price of iPhone XS Max, how the sales of iPhone XS Max will fare by the end of this year.
