Apple’s iPhone 6s and 6s Plus became available on Friday and Teardown.com has performed an initial analysis of the iPhone 6s. Apple is touting that “The only thing that’s changed is everything” which also leads to the cost of the iPhone 6s costing about $16.50 or 7% more than the iPhone 6 and about $33.50 or 16% higher than the iPhone 5s. (Note that I own Apple shares).
Impact to iPhone margins
Since the iPhone 6 became available last year Apple has been able to increase the iPhone’s Average Selling Price (ASP) by having the first memory upgrade be 64GB vs. 32GB for $100 and the 6 Plus costing $100 more than the 6. This year, except for some price changes in international markets, the prices for the 6s are either the same or close to the 6.
Teardown.com’s analysis of Apple’s iPhone 6s 16GB model has it costing $16.50 more than last year’s iPhone 6. With a price of $649 in the US this is a 2.5% or 254 basis points impact to the iPhone’s gross margin. Analysts tend to peg the iPhone’s gross margin around 45% so 2.5% is a hit but it isn’t a major one. Everything else being equal if Apple sells the equivalent 74.5 million iPhones in the December 2015 quarter as it did a year ago its cost of goods would increase by $1.23 billion, lower its total gross margin from 39.9% to 38.2% and decrease its EPS from $3.06 to $2.86.
Details from Teardown’s analysis
Teardown lists which manufactures provide the various components ranging from Analog Devices to Qualcomm, breaks out the bill of material costs into 11 different segments and provides details and pictures of many of the pieces available via this link. For Trekkie fans it has a picture of the Starship Enterprise in its report.
Not surprisingly the biggest cost increase was Apple increasing the NAND memory from 1GB for $12 to 2GB for $23.50.
On the other hand 3D Touch didn’t add much to the Display cost going from $40.50 to $42.50.
Apple’s A9 processor has the M9 motion coprocessor embedded in it. The costs of the application and baseband processors increased from $52 to $58.50 and it includes an upgraded Qualcomm part.
