updated 12:00 am EDT, Tue October 1, 2013
Analyst argues Apple aiming for better profits over marketshare
A "bill of materials" breakdown for both versions of the new iPhone show that the 5c is significantly cheaper to build than an iPhone 5, while the 5s is only marginally more expensive than a 5, according to a new report from UBS analyst Ben Rooney. While the BOM cost does not include the massive amounts of money devoted to research & development, OS and software development, assembly, distribution, shipping, marketing, packaging and other costs, the new iPhones are likely to be more profitable overall.
The report, first noted by the Wall Street Journal, claims that the 16GB 5c has a BOM of around $156, while the 16GB 5s costs $213. The estimates are somewhat different than those provided by IHS iSuppli, which put the costs at $173 and $199 respectively.
The BOM cost of the iPhone 5 was estimated to be $205. The biggest savings on the 5c comes from the polycarbonate body and other design efficiencies, along with not having the more advanced sensor systems and Touch ID fingerprint sensor, both of which are estimated to cost about $7 each.
Some of the other cost differences between the 5c and 5s may be surprising, such as the fact that the 5s 64-bit processor costs only $3 more than the 5c's 32-bit A6, and that the casing difference between the 5c's plastic and the 5s's aluminum and glass make for a $42 difference in BOM costs between the two. Rooney says he believes the actual margins on both devices is around 50 percent, though this figure is unconfirmed. The retail prices for the 16GB 5c and 5s are $549 and $649 unsubsidized, respectively.