According to a teardown by IHS Markit Ltd, the total manufacturing cost that Apple spends on an entry-level iPhone 7, a model with a 4.7-inch screen and 32 GB of storage, is $224.80 (Rs.15,065). At the same time, the starting price of the iPhone 7 will be Rs 60,000 in India. See the difference?
But, Apple is spending more to manufacture its iPhone 7 smartphone than predecessor iPhone 6S due to features such as a bigger battery and larger storage capacity. This compares with an updated IHS estimate of Rs.13,402 for an entry-level iPhone 6S in 2015. (which is $36.89 less)
IHS Markit also said on Tuesday the iPhone 7's Bill Of Materials (BOM), a financial estimate of the raw materials used, was "in line" with flagship smartphones made by rival Samsung Electronics Bill Of Materials but Apple ekes out better margins.
"All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past," said Andrew Rassweiler, senior director of cost benchmarking services at IHS Markit.
IHS Markit has not yet performed a teardown analysis on the larger iPhone 7 Plus. Supplies of Apple's iPhone 7 Plus have been exhausted in all shades, and the smaller iPhone 7 has also sold out in the new jet black color, the company said last week.
Yet, in some markets, such as China, interest in the new phone has been muted, as cheaper local brands amp up their design and marketing.