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Apple sticks to usual design, pricing for iPhone 5c

Posted: 02 Oct 2013 ?? ?Print Version ?Bookmark and Share

Keywords:NAND flash? DRAM? smartphone? retina display?

Apple didn't ruffle any feathers with the iPhone 5c, turning to an almost identical pricing strategy and hardware design as the predecessor iPhone 5, according to preliminary results from the Teardown Analysis Service at IHS.

The low-end model of Apple's iPhone 5c with 16GB of NAND flash memory carries a bill of materials (BOM) of $166, based on a physical dissection of the production. The cost rises to $173 when the $7 manufacturing expense is added in. The 32GB model carries a combined cost of $183.

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Table 1: Preliminary teardown bill of materials and manufacturing cost estimate.

While this is considerably less than the $197 BoM and manufacturing cost for the original 16GB iPhone 5 based on the final results of the IHS teardown conducted one year ago, it's still on the high end for a smartphone. To attain the cost and pricing required to merit low-end pricing of $400, while maintaining Apple's customary high hardware margin, the combined BOM and manufacturing expense for the iPhone 5c would have had to amount to about $130.

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Table 2: Key vendors and parts (in descending orer of component value).

"Many expected Apple to take an affordable strategy with the iPhone 5c, producing a lower-cost smartphone that would be priced at around $400 in order to address developing markets, such as China," said Wayne Lam, senior analyst for wireless communications at IHS. "However, the reality of the iPhone 5c is completely different, with Apple offering a phone with a $173 BOM and manufacturing cost, and a $549 price tagwithout subsidies. Once again, Apple has stuck to its old tried-and-true formula of optimising its iPhone hardware gross margins to attain maximum profitability."

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