Apple Loves Profits More Than It Loves You: Or, Why A $400 iPhone X Costs $1000…


The iPhone X costs $1000 but it only costs $370 to make – yep, that’s one hell of a profit margin

Apple’s iPhone X is now available to buy – if you can find one. The handset retails for over $1000/£1000 in most places, making it the most expensive phone around.

But how much does it cost Apple to make? Is it THAT much more expensive than the iPhone 8 Plus?

According to IHS, the iPhone X costs Apple $370.25 to make. The base iPhone 8 model, meanwhile, costs $255.16. The iPhone X is more expensive because A) it’s a new design, B) it features some new gizmos, and C) it has an OLED display.

But the phone itself still costs less than $400 to make – and Apple is charging you $1000 for it. This is why Apple is one of the most profitable companies on the planet – it always operates with huge profit margins.

One of the most expensive components of the new iPhone X is its OLED display, which Apple sources from Samsung. The reason its so pricey – $110 per unit – is because Samsung is the sole supplier and can, therefore, hike up the price. Samsung has want Apple wants and it is essentially charging the company a premium to acquire it, as you probably would too.

“Apple is definitely paying a premium for OLED technology,” said Wayne Lam, an analyst IHS. “Apple is locked into one supplier and Samsung can dictate its own price.”

Lam reckons the iPhone 8 and iPhone X generate the same level of profit for Apple, despite the differences in pricing. How? Simple: The bill of materials for the two phones equals about 37% of the RRP, and because the iPhone X costs more to make, this effects Apple’s margins on the product.

Apple has always downplayed this component breakdown reports; Tim Cook even said he has never seen one that is even remotely accurate. But then that’s exactly what he would say, right?

So, yeah… that’s basically why the iPhone X is so expensive. Apple loves making profits more than it loves you. Simple. Not that you’d know this from the company’s quasi-religious keynote revivals.

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