CHART: The difference between iPhone 'build costs' and retail price has more than doubled in just five years

‘Shut up charts guy and take our money, Apple!’ Picture: Getty Images

As the price of each new iPhone rises, Apple is taking more cream of the top than ever. Maybe.

Since around the release of the iPhone 4, it’s been an annual sport for tech journalists to break down the “true cost” of how much an iPhone is actually worth as a sum of its parts.

Yesterday, we got the 2018 update. Canadian firm TechInsights did the teardown, and came up with Apple spending just $610 on components for the 256GB version of the iPhone XS Max. It sells in Australia for $2049.

It sounds a little outrageous, but Apple CEO Tim Cook claims these annual updates on the iPhone Bill of Materials (BOM) sound like rubbish.

“I’ve never seen one that’s even close to accurate,” he said in 2015, during a quarterly earnings call.

For starters, there’s a lot of budget-eating that goes on between buying the materials to build an iPhone and actually assembling it, marketing it, and selling it as a desirable product.

But we’re still going to put all of the BOMs and retail prices since the iPhone 4 in a chart, because it’s fun:

Image: Sam Jacobs

The prices could be out by a few dollars here and there, as different teardowns bring in[preserve] different results, but the broad trend is noticeable.

And ta-da – the iPhone XS is not only the most expensive iPhone ever, it’s also potentially Apple’s biggest earner – in dollar terms. There’s a $1439 profit window for Apple’s marketing division to play with between it leaving the factory and slipping into fans’ ever-deepening pockets.

But in percentage terms, the biggest winner – according to these allegedly spurious figures – is actually the 16GB iPhone 6. Here’s the messy combo chart with a trend line for margin per phone no one asked for:

Image: Sam Jacobs

That one is also interesting when you look at how much a little bit extra in build cost – when Apple finally jumped out of the iPhones 5-7 and back into its iPhone 8 “supercycle” – translated into a whole lot more it could ask for at the counter.

And that, ultimately, is the only point that matters. Smartphones are worth exactly how much people are willing to pay for them.

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