Investors in Apple’s shares have long cheered the company’s ability to command premium prices, and fanatic customer allegiance, for its sleekly designed consumer electronics (CE) products. Apple continues to pursue that strategy with the launch of the iPhone 6, and to an even greater degree, the iPhone 6 Plus.
Buyers of the Apple iPhone 6 Plus will pay $100 more for an additional 0.8 inches of screen size, IHS’s Andrew Rassweller highlights in a post on the IHS Technology website.
The iPhone 6’s bill of materials (BOM) – with 16 gigabytes (GB) of NAND flash memory – totals $196.10, according to a preliminary estimate from IHS Technology’s Teardown Mobile Handsets Intelligence Service. Production cost rises to $200.10 when manufacturing expense is included.
iPhone 6 Tear-Down
The iPhone 6 Plus’s BOM, by comparison, amounts to $211.10 – $215.60 when $4.50 of manufacturing cost is included. While the difference between the iPhone 6 and iPhone 6 Plus BOMs is only $15.50, the latter sells for $100 more. As IHS Technology highlights:
“With a contract from a wireless operator, the 16GB version of the iPhone 6 is priced at $200, while the Plus model amounts to $300. The unsubsidized pricing for the two phones is $649 and $749, respectively.”
“Apple has always been adept at offering higher-end iPhone models with enhanced, desirable features—and then pricing those versions for maximum profitability,” Rassweiler, senior director, cost benchmarking services for IHS, stated. “In the past, the premium versions of iPhone offered higher memory configurations for additional profit. While Apple continues this memory strategy, the company is also taking a similar approach with the iPhone Plus, structuring its pricing to add bottom-line profit on models that have a very desirable feature: a large phablet-sized display.”
IHS Technology’s complete iPhone 6 model teardown analysis is available in the “Teardown – Apple iPhone 6” report from the market research provider’s Materials and Cost Benchmarking service.