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Unwanted plus: Bigger iPhone 6 pricier to buy than to build

Posted: 24 Sep 2014 ?? ?Print Version ?Bookmark and Share

Keywords:iPhone 6 Plus? BOM? display?

The display size differentiates Apple's latest smartphone models, with the iPhone 6 Plus bigger by 0.8 inches. While the bigger screen size will charge $100 extra to purchase, Apple only shells out $16 more to produce it, delivering an even heftier margin than normal for its wildly popular smartphone line, according to IHS Technology.

The iPhone 6, equipped with 16GB of NAND flash memory, has a BOM that amounts to $196.1. The cost of production rises to $200.1 when the $4 manufacturing expense is added. On the other hand, the iPhone 6 Plus carries a $211.1 BOM, which rises to $215.6 with the additional $4.5 manufacturing cost. This is only $15.5 higher than the total for the iPhone 6.

"Apple has always been adept at offering higher-end iPhone models with enhanced, desirable featuresand then pricing those versions for maximum profitability," said Andrew Rassweiler, senior director, cost benchmarking services for IHS. "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."

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.

The table attached presents the preliminary BOM and manufacturing cost estimate of the Phone 6 and iPhone 6 Plus. Being preliminary in nature, the teardown assessments account only for hardware and manufacturing costs, and do not include other expenses such as software, licensing, royalties or R&D.

iPhone 6 Plus

Preliminary Apple iPhone 6 and 6 Plus teardown estimates.

Phablet fees

The most obvious difference between the two new Apple smartphone models is the display, with the iPhone 6 sporting a 4.7-inch screen, and the Plus coming in at 5.5 inches. However, while the larger screen is more expensive, it doesn't account for the entire cost differential between the two phones. The Plus also carries higher BOMs for its enhanced camera and battery sub-systems.

For both the iPhone 6 and iPhone 6 Plus models, the screens feature in-touch in-plane switching liquid crystal displays (LCD) supplied by two sources: LG Display and Japan Display. The displays likely employ Corning's Gorilla 3 glass, compared to Gorilla 2 in the iPhone 5S and 5C.

Because of its larger size, the display/touch-screen sub-system in the iPhone 6 Plus carries a cost of $52.5, compared to $45 for the iPhone 6.

Both displays are also more expensive. The smaller, 4-inch display/touch sub-system used in the iPhone 5S model was only $41, based on the pricing from October 2013.

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