According to Apple Taiwan’s official website, the retail price of iPhone 7 ranges from NT $24,500 to NT $36,900, which is similar to that of iPhone 6S. Have you ever wondered about the production cost of iPhone7? IHS Markit’s latest findings suggests that the iPhone 7’s Bill Of materials (BOM) is approximately US $224.8. The manufacturing cost is 18% higher than that of iPhone 6s, which was launched in 2015. In this light, Apple’s retail price for iPhone 7 at US $649 is three times more expensive than its BOM. Apple has not commented on this comparison.

According to IHS Markit’s report, the retail price remains unchanged even though iPhone 7’s raw materials and manufacturing costs increased. The unchanged price reflects the smartphone market’s increased maturity, as most of the consumers that intend to own smartphones have already purchased one.

For Apple, Samsung and other smartphone manufacturers, the challenge lies in the difficulty of identifying new customers. New smartphones therefore need to be attractive enough to urge existing users in upgrading to new models or manage to attract users that originally own other brands of smartphones. Such competition surely hinders on Apple’s profitability while echoing the company’s sloppy iPhone sales for two consecutive quarters.

Wayne Lam, analyst of IHS Markit, pointed out in the report that consumers have matured and demand better products. Therefore, manufacturers seek continuous innovation despite rising costs. To boost the sales of new iPhone, Apple has been luring users to buy more expensive models, such as the iPhone 7 Plus with enlarged screen and increased RAM.

The newly-launched iPhone 7 is very similar in appearance to previous iPhones over the past two years. However, iPhone 7’s features include water-proof, powerful A10 chip, better display screen, improved camera and upgraded Home button. Apple has also removed the headphone jack to make space for battery with larger capacity. Apple’s cost control is still better than that of Samsung. The manufacturing cost of Samsung’s Galaxy S7 is approximately US $265 while the retail price is similar to that of iPhone 7, said Wayne Lam

By: DocMemory
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