The cost of manufacturing an iPhone is a lot less than the price of the devices. Here's is the reason why we pay so much more.
Apple just launched three smartphones: iPhone X, iPhone 8 Plus and iPhone 8. They are some of the most expensive devices in the global market. When it comes to India, the iPhone 8 and iPhone 8 Plus have already launched here and they cost much more than their US counterpart. However, the cost of manufacturing an iPhone is a lot less than the MRP of the devices. According to a report by IHS Markit, the cost of making an iPhone 8 is $247.51 and that of an iPhone 8 Plus is $288.08. IHS Markit is a market research firm which does a teardown of smartphones after they are released. A teardown reveals several details regarding the mobiles which may not be in public view in general.
If we convert the cost of manufacturing an iPhone in Indian currency, the iPhone 8 costs around Rs 16,200 and iPhone 8 Plus costs Rs 18,900. It should be remembered that this is just the cost of the components which Apple spends to make each device. IHS Market has posted about this report on its website. However, we must note that this is not an official source nor has Apple responded to it. But teardowns have become a key part of most phones these days, especially premium ones, as they give the buyer a better idea about the devices. Yet, Apple boss Steve Jobs had recently said that such reports are not accurate at all.
While we can be sceptical about the specifications about the phones, there might be some truth in the component costs. Firms like IHS Market keep tracking supply chains for tech devices. Also, the cost that has been revealed is not less. On the contrary, the iPhone 8 and iPhone 8 Plus costs $30 and $50 more than the previous models. This is a huge jump as the components of a mobile do not cost that much. However, in comparison, Samsung Galaxy S8 components cost $307, another IHS Markit report had said. So, Apple breaking cost barriers in 2017 make sense as it is also investing in its hardware. But the question arises, why are we paying so much more than the cost.
The analysis done by IHS Markit does not include the money and labour spent on Research and Development, as well as marketing. This process requires a whole lot of resources, including dollar as well as people. Additionally, Apple also has to earn a profit. This is where the company keeps a big margin as it targets the premium customers.
In India, Apple iPhone 8 and iPhone 8 Plus will go on sale from September 29. The pre-booking for the devices have already started. The iPhone 8 price in India starts at Rs 64,000 and the iPhone 8 Plus starts at Rs 73,000. The higher storage variants cost more. Meanwhile, there is no information on the component cost of an iPhone X, but understandably, it would be more than the other two devices.