We all know that smartphones can be expensive, with some devices costing upwards of 1000 USD. But how much does it really cost to make a smartphone? Join us as we delve into the Android and iPhone innards to discover the profit margins and expenses in smartphone manufacturing.
How much does a smartphone cost to make?
Research company IEEE has produced a chart which measures the real cost of each smartphone component. In this case, Apples's iPhone and the Samsung Galaxy S range are compared. Check out the image below.
Thanks to this graph, we can also see that the three most expensive aspects of each handset: the electronic and metal components, the display, and the processor (core electronics). These three components are currently where most of the manufacturing budget is spent, and it's been similar for the past three or four generations. The cost of the camera component, on the other hand, has grown in the last few years (as social apps, selfies and taking photos of food has grown in popularity too).
It may come as a surprise that the battery is not one of the biggest expenses when "good battery life" is arguably one of the most important factors among smartphone owners. But what you have to consider is that batteries are relatively cheap to manufacture and the technology behind them hasn't changed for many years. Since the Galaxy S, Samsung's batteries have largely only seen a change in capacity.
Are smartphone prices too high?
According to the above chart, a iPhone 6 costs approximately 230 dollars manufacture. A new, unlocked, 16 GB iPhone 6 costs 649 USD from the Apple store, representing a 280 percent profit margin on each handset sold (of course, it's not that simple, there are serious marketing and distribution costs to consider, but more on these other costs below).
Does such a profit margin seem justified? Yes, business is business, and a company that creates and sells a product wants to make money. But does it have to be sold for so much money? Of course not, but people buy it. The day you stop buying, the price will fall; this is supply and demand.
The truth is, there are far more costs involved in smartphone production than simply component costs. Research & development, for example, comes at a huge price, with every smartphone manufacturer racing to release the best most impressive devices every year which must sell by the millions, or the company could be finished.
But with processors coming from MediaTek and Qualcomm, and cameras coming from Sony, how much are other manufacturers even relying on R&D? Admittedly software costs money, and TouchWiz, Sense or any other interface requires people and resources to create, but whether this justifies the ultimate retail price isn't clear.
Regardless, modern society is willing to spend a fortune just to have the latest smartphone, and until that mentality changes, manufacturers will continue to do what they want and, above all else, what benefits them most, whether we like it or not.
What are your thoughts on smartphone pricing? Is the price we pay worth it for these awesome devices? Or is it far too high? Let us know in the comments below.
Originally written by Daniel Viejo for AndroidPIT.es.