Tech

Here’s the secret truth about Apple’s very profitable iPhone X

Here's the truth about how much the £999 iPhone X actually costs Apple to build
It costs more than just a few pounds (Picture: REUTERS/Getty)

It’s a simple fact that the iPhone X is the most expensive smartphone that Apple has ever released. And that’s a good thing, if you are Apple.

If you add in the cost of the AppleCare extended warranty and decide to go for the model with increased storage, you’re looking at £1348 for the handset that Tim Cook describes as ‘the future of the smartphone’.

Apple confirms problems with new iPhone X screen

That’s a lot of money for a smartphone, even one that has the revolutionary aspect of recognising your face.

But the greatest achievement of Apple is the ability to command a price premium and maintain its profit margin on every handset it sells, and be loved because of this high price.

Although the margin is significant when you look at the raw costs, the true margin is much more in keeping with Apple’s previous form.

According to TechInsights, all the parts in the handset are estimated to cost Apple just £273 ($357.50). The price of an iPhone X in the US starts from $999 (plus tax), so the calculated build cost offers Apple a gross margin of 64% on the base model.

Naturally, these figures don’t include the R&D costs of the iPhone X and you can be sure that the technology behind FaceID doesn’t come free.

Apple's New iPhone X goes on sale at an Apple Store
(Picture: Tayfun Coskun/Anadolu Agency/Getty Images)

Nor do the figures share out the profit to distributors and mobile networks who help sell the handset.

Add your best estimates of these values to the balance sheet and it would not surprise me to see that the iPhone X has a true margin of around 40%.

That’s a value that keen Apple watchers will be familiar with, as it is known that Tim Cook and his team has long prized the 40% mark up for its hardware.

Arguably, the iPhone X is the most expensive smartphone Apple has ever released because Apple prizes its constant margin more than keeping the iPhone price competitive with other handsets in the market.

It also has the added bonus of increasing the retail price, which in turn increases the status of the iPhone X.

Apple has definitely turned the increased price of the iPhone X to its advantage.

But if the latest model costs more than the last handset, it must be better and do new things – such as the Face ID feature and the new notched screen.

Is it worth the money?

Only time will tell.

But as Christmas approaches, it appears that the increased supply means you can pick up a handset in store today, or have one delivered tomorrow.

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Original Article

The post Here’s the secret truth about Apple’s very profitable iPhone X appeared first on News Wire Now.

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