Apple spends less on parts for the iPhone than its competitors

Apple  is known for its ability to secure a large volume of parts at very affordable prices. It’s one of many factors that go into the cost of producing a handset. It’s also one that the Cupertino company  is leveraging to make more money off its smartphone than its competitors.

According to a recent Wall Street Journal report that looked at component prices, Apple’s margins on the iPhone 4s are an impressive $459. This compares to the $241 Nokia is making off the parts for each Lumia 900 handset. The bulk of Apple’s savings can be found in the touchscreen, which cost $37 each, and the wireless chips which are priced at $23. Overall, Apple is spending $19 less on parts per device than Nokia. This might not sound like much, but it adds up when you look at millions of handsets instead of just one.

The Wall Street Journal then points out that the iPhone commands an off-contract price of $649, while the Lumia 900 sells for $450 and jumps to the conclusion that “Apple makes nearly twice as much on iPhone sales as Nokia does on the Lumia 900.”  This claim is a bit off-base as it excludes other costs like research & development, manufacturing, marketing and distribution. It’s the whole package of the handset, from its design to its inexpensive parts, that explain why Apple will continue to make money hand over fist with the iPhone, while Nokia barely scrapes by.

[Via The Wall Street Journal]

  • Bradley Larcher

    Do carriers know this? If they do, then why are they paying such high subsides to Apple? So that means that the iPhone is not that much of a premium device, but an overpriced product that is just helping Apple laugh out loud all the way to the bank

    • Vusi Kweyama

       … And your point is?

      • Fhgfdgfdgfd

         apple rip people off and people are too stupid to know it

        • Anonymous

          Prices are not set on cost. They are set on value. And value is very subjective. People already know what apple offers in terms of technology, useability, status, bragging rights, etc. The carriers already know what apple offers in terms of market share, type of customer, loyalty, etc. If the people consider this offering is worth the $200 investment + $100 a month and the carriers consider it’s worth the $400+ they subsidize… then so be it. It’s called capitalism.

    • simdude

      Who says they are overpriced? Do you understand the difference between recurring and non-recurring cost? This “report” only discusses recurring.

    • Very simple you do no thave iPhone as an offering you are missing out on huge number of potential customers that you ca rip off with ridiculous data packages forever. 

    • Where did it suggest iPhone is overpriced, or even NOT a premium device? It didn’t, because the oled displays Apple uses are better than the ones Nokia uses, even if they were able to secure a better deal on them. The story is how Apple can secure better deals than it’s competitors.

      An of course the carriers know. They pay high subsidies because they want the devices that will bring in customers, and iPhones bring in customers.

      • Alex Berger

        I wouldn’t say Apple’s display is better.
        Higher resolution: iPhone 4s +
        bigger screen size: Lumia 900 beats iPhone 4s
        viewable in the direct sun light: Lumia 900 beats iPhone again
        display/gorilla glass durability: Lumia 900

        And if you compare all the other components:
        LTE/4G speeds: Lumia 900 advantage
        durability of the body: Lumia 900 advantage
        there are few more …

        the reason iPhones sells like crazy – it is established iOS with tons of apps and people trust it. Where Nokia is new to the game in spite that it has a superior phone and OS, the company have to win people over. It is not an easy task to change people’s mind.

        But basically what I am saying is Apple is selling old crap for more money 🙂

  • The market determines what the value of a device is. If the iPhone were deemed too expensive by the public, it would not sell. The iPhone sells very well at the current price, so indeed that’s what it is worth.

  • Anonymous

    Yes. Captain obvious

  • P Rb

    You could say that about any product, and I’m sure there are people who do.  But you sounded pretty stupid saying it!

  • So screwing the people that give you the money to do this is clearly the way to go…

    • Anonymous

      that’s capitalism.

  • 4968

    Nokia also make money of every iPhone. Apple settled with Nokia over the IP for all the patents that are essential for 2G and 3G calls.

  • but when your iphone falls to the ground it shatters … when a nokia phone falls to the ground… the ground shatters !!!! (lumia has the legacy of 3110 and 1008)

  • i would rather buy the original iPhone, then the copy of it, smasung. ciao

  • Anonymous

    Prices are not set on cost. They are set on value. And value is very subjective. People already know what apple offers in terms of technology, useability, status, bragging rights, etc. The carriers already know what apple offers in terms of market share, type of customer, loyalty, etc. If the people consider this offering is worth the $200 investment + $100 a month and the carriers consider it’s worth the $400+ they subsidize… then so be it. It’s called capitalism.

    • Olswedthero

      I am not sure what you are reffering to, “$100 a month”, or the other posters down there who refer to (paraphrasing), “rediculously high recurring data costs”.. unless US subscribers, are being sucked into believing, by their carriers, that iphone data ‘costs more’ than other data.
      Here in canada, you buy whatever voice+data package you want.. reegardless of what phone you have.

      • it depends,  i M not a Iphone fan, but i will buy it if i were in western 😉
        btw, i am a portable power dealer,happy to supply my items for you guys ….
        lol

  • If you need an iPhone badge you’ll be ripped off, if you need a good deal you won’t have iPhone badge…simple is that. 

  • whatever, a portable power is available,isnt it? lol

  • BuildSomething

    Spoken like someone who has never been involved in electronics manufacturing.  Higher volume gets you lower pricing, no matter who you are.  Nokia benefited from this when they owned the dumbphone market, now Apple is benefiting, but somebody like Samsung who makes both the phones and the parts can really rake it in either way.  

  • BuildSomething

    Spoken like someone who has never been involved in electronics manufacturing.  Higher volume gets you lower pricing, no matter who you are.  Nokia benefited from this when they owned the dumbphone market, now Apple is benefiting, but somebody like Samsung who makes both the phones and the parts can really rake it in either way.  

  • Ratburst

    well funny, because all they sale have a huge price compared with competitors

  • Anonymous

    Someone got her news late..

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