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What’s the most expensive smartphone component? Check your guess here

Posted: , by Victor H.

What’s the most expensive smartphone component? Check your guess here
What’s in a smartphone? Most prominently a display and a case to hold it along with its internals, but interestingly that’s not its most expensive part. A modern smartphone consists of more than 25 components, coming from different manufacturers, at different prices, and all of this takes some high precision technology and a human hand to get crafted into a whole package.

And the most expensive part of that package is the... internal NAND flash memory. The technology allows keeping data without power, and on average 16GB of internal memory costs between $20 and $22. That’s more expensive than the massive screen on your phone which averages $18 to $20 in price.

Check out this piece of statistics will also reveal much about the profit phone makers make from devices with more memory. If we look at the standard $100 premium added for an additional 16GB of flash memory for the iPhone for example, and compare it with the average of $20 that Apple pays, we can definitely see where that huge profit margin comes from.

It’s all laid out in the infographic below, an infographic where finally there’s more info and less graphic.



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posted on 10 May 2012, 09:52 7

1. jackhammeR (Posts: 1548; Member since: 17 Oct 2011)


tada! truth revealed
new iphone usually costs what?...something arond 600 or 750 euros?

posted on 10 May 2012, 09:53 10

2. bobfreking55 (Posts: 866; Member since: 15 Jul 2011)


16GB of RAM for the iPhone? lol. please fix. :)

posted on 10 May 2012, 10:12 10

4. Victor.H (Posts: 406; Member since: 27 May 2011)


Ah, must have been daydreaming! It's corrected now.

posted on 10 May 2012, 10:02 3

3. kastor (Posts: 43; Member since: 15 Jan 2012)


nobby 16GB of internal memory not ram,becaase of taht lower priced phone dont have much internal memory

posted on 10 May 2012, 10:37 4

5. som (Posts: 768; Member since: 10 Nov 2009)


Each additional 16gb Apple charged extra $100 but Apple paid only $20 it is $80 in profit.

posted on 10 May 2012, 10:46 11

6. remixfa (Posts: 13902; Member since: 19 Dec 2008)


thats also a misnomer, because it doesnt cost apple 40 bux for 32 gig of nand. more than likely they paid like 30 bux for it at most. so they are making like an extra $170 in pure profit if you get the 32 gig.

this is why i love when the inuts brag about apple's bottom line. guys, that just means you are paying an arm and a leg. their bottom line is a direct reflection of how much money they can get out of your pocket. What an odd thing to brag about. "yea, im help making someone thats already super rich.. even more super rich.. by giving them a huge premium for nothing!! yeaaa!!"

posted on 10 May 2012, 10:52 3

7. Maxaravind (Posts: 9; Member since: 06 Apr 2012)


Remixfa u r right....!!

posted on 10 May 2012, 11:01 4

8. thnkthru3 (Posts: 73; Member since: 25 Dec 2011)


Hey wait...to Apples credit you can't legitemately calculate profit margin without figuring in labor cost; which of course in the case of Apple and the Chinese manufacturing must kick it up about twenty five to fifty cents per unit.:-)

posted on 10 May 2012, 11:05 8

9. groupsacc (Posts: 232; Member since: 28 Feb 2012)


It doesn't matter how much it costs to produce these products, it's all just matter of supply and demand that dictates the final price tag. Even if an iPhone costs $1 to produce, if demand allows they can sell them for $1000. At the end of the day, these are businesses not charities, their ultimate goal is to maximise profit.

But still, it's interesting to see how much each components cost though. I wonder how much they spend on marketing, labour, R&D, after-sale services, logistics, patent licencing, future firmware development, etc etc; and see the true final costs for producing each phone. Considering all these, I don't think we are getting ripped off that much from these companies. We should be just thankful that the competition is healthy and there isn't a monopoly in this market sector.

posted on 10 May 2012, 14:03 2

13. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)


Really good comment man. Unfortunately this site is crawling with android trolls. Anything than outright blind hatred for Apple will get you a thumbs down.

I've tried explaining to some of them that there's more costs involved other than just straight parts. They don't get it.

posted on 10 May 2012, 14:31 2

14. groupsacc (Posts: 232; Member since: 28 Feb 2012)


Sorry mate, I wasn't actually commenting on any particular brand. I was commenting about all the companies in general, whether it'd be Samsung, Apple, HTC, etc.

posted on 10 May 2012, 14:45 2

18. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)


You didn't bash Apple though so you got the thumbs down.

posted on 10 May 2012, 14:37 2

15. Non_Sequitur (Posts: 1111; Member since: 16 Mar 2012)


For once, I agree with taco. The iPhone is all marketing. Steve Jobs is an excellent businessman. He got people hooked on Apple products and raised the demand. Now, people buy anything from Apple, no matter the cost.

posted on 10 May 2012, 14:37 2

16. Non_Sequitur (Posts: 1111; Member since: 16 Mar 2012)


For once, I agree with taco. The iPhone is all marketing. Steve Jobs is an excellent businessman. He got people hooked on Apple products and raised the demand. Now, people buy anything from Apple, no matter the cost.

posted on 10 May 2012, 14:45 2

17. RazaAsad (Posts: 100; Member since: 24 Nov 2011)


Apple buys in bulk and bulk costs less. Maximizing the profit was, is and will be the main purpose of business but unlike 60s when world economy was on boom and "sales by any means" was the practice, consumer rights and corporate ethics were introduced. No matter small or big, some companies follow em and some not. You can expect a small retail store following ethical approaches and may observe giants exploiting and earning heaps of money with their over-hyped products and services. Nokia seems a sinking ship still investing insane amount of cash over R&D and still manages to produce value for money products and same is the case with other companies. Apple very much depends upon the technology of other manufacturers and we all know that. It most of the times buys already available ground and builds over that. Its not R&D (I do not say thats wrong but you have to admit the fact). As far as monopoly is concerned, I admit there is not any but if we talk about hyped products, iphone is the king with no other company even closer in that field. Apple over the years has developed a hype (Thanks to Steve Jobs) which helps it attract more people who incline towards hyped products rather than making comparative analysis decision. "If you do not have an iphone, well you do not have an iphone" is for such people who would worry they do not have an iphone rather than giving a fair chance to other products before buying. At the end it all boils down to personal choices, I may be satisfied with over-hyped products to show off whereas someone may spend a little brain before spending money :).

posted on 10 May 2012, 14:56 1

19. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)


One big blob of nonsense viphone users on average are more techy, educated and successful.

posted on 11 May 2012, 12:09

24. remixfa (Posts: 13902; Member since: 19 Dec 2008)


macarena

posted on 11 May 2012, 03:19 1

22. mrochester (unregistered)


This is so true. Products are priced based on what the market will bare. What is really interesting to me is the psychology behind it. Why is it that Android devices come crashing down in price so soon after launch while the iPhone is able to maintain the same price point? What is it about people buying Android devices that means these things need to come down in price so quickly? Is it that the mentality of the average Android users is that things should be cheap/free so manufacturers have to keep slashing prices to maintain sales?

There are some studies that touch on these questions but they tend to come up with really conflicting conclusions. The most prominent I remember found that people buying Apple products are usually better educated and better off than people buying products from other manufactureres. Does that mean people buying Apple products are making a more informed decision and ergo people buying other products are just being "sheep" by following whatever is popular?

I would love to see a study that got to the bottom of some of these issues!

posted on 11 May 2012, 12:05 1

23. nb2six (Posts: 298; Member since: 27 Apr 2011)


The biggest reason the iPhone can stay at the same price point is because it is the only iPhone. The only one running iOS. Where with the Android models out there, folks have tons of options to choose from and thus there has to be more attractive pricing in order to make profits. However, even with your high end devices, you still them sitting at about the same price point for a generous time. When you have a multitude of android devices coming out that one up each other throughout the year, it makes it almost impossible for a device that is now not the king of the hill to hold its ground at a "king of the hill" price point.

Just my observations in the years that I have been selling devices. I don't want to make myself out as a market analyst or whatever those guys with the fancy titles do.

posted on 11 May 2012, 12:12

25. remixfa (Posts: 13902; Member since: 19 Dec 2008)


exactly.

free market competition pushes pricing, and the heavy competition on the android side vs the lack of competition on the iOS side is why android phones drop in price. if it was one android superphone vs one iOS phone, the iOS phone would end up dropping first. Android is more popular and better specked, so on a 1 to 1 fight, less likely to drop pricing first.

posted on 10 May 2012, 11:42 2

10. Tsepz_GP (Posts: 770; Member since: 12 Apr 2012)


Wow, Samsung make a lot of components, explains why they can compete easily in price the low end with a low end dual-core like the Galaxy Ace2.

posted on 10 May 2012, 11:54 6

11. dirtydirty00 (Posts: 248; Member since: 21 Jan 2011)


LOL this is why i always laugh at the iphoners. i mock them asking "now what model do you have? the 16GB? the 32GB?" LOL pay 100 bucks for 16 GB more. what a joke. and a rip off IMO. for a mear 30 bucks i can get a 32GB micro sd and throw it in my droid. now that boosts my phone an EXTRA 32GB. not the 16 extra that the 100 gets you from apple.

posted on 10 May 2012, 12:44 1

12. Mittal (Posts: 427; Member since: 14 Dec 2011)


hmmm.. Interesting piece!

posted on 10 May 2012, 15:10

20. jimjam (Posts: 234; Member since: 28 Jun 2011)


the patent fee to microsoft

posted on 10 May 2012, 15:32 2

21. CivicSi89 (Posts: 348; Member since: 23 Jul 2011)


I think the most expensive component to a smartphone is the phone bill. haha!

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