The reason for Apple's record profit forecast? Apparently, the iPhone X costs $358 to make


"We expect revenue to be between $84 billion and $87 billion." This simple sentence mentioned on the fly by CEO Tim Cook during a conference call with investors discussing Apple's current quarter forecast, have sent the stock on an upward trajectory since Friday, the day the iPhone X was released. If this revenue number pans out, and Apple is usually conservative with estimates, this will mark the most bountiful quarter for any company... in history.

Given the rumors that the iPhone 8 lags in sales compared to the iPhone 7, and is even overcome by the iPhone 8 Plus, such a rosy outlook might seem premature, but Apple is not one to talk empty words on conference calls, so where is Tim Cook's optimism coming from? Well, from the iPhone X gross margin, it seems. The phone got another teardown over the weekend, and its bill of materials (BoM) estimate is $357.50.


While quite a bit higher than for most iPhones so far, whose BoM usually hovers in the $200-$250 range, the retail price of the iPhone X is also up there, and returns no less than 64% gross margin for Apple, compared to the iPhone 8's 59%. Needless to say, this doesn't include R&D expenses, or marketing and administrative costs, but these, in the case of Apple, usually stay in the 10-15% range anyway, even for a unique handset like the X. Thus, while the cost of materials to build an iPhone X is 25% higher than for the iPhone 8, its price is 43% higher, so Apple expects the new OLED iPhone to add a big fat chunk to its revenue and profit this quarter, and probably the next few.

The priciest part in the iPhone X is the OLED screen, supplied by Samsung, at $65.50 a pop, just as predicted, but Apple also didn't skimp on another important aspect - structural rigidity, as the $36 stainless steel frame costs much more than the iPhone 8's $21.50 aluminum housing, which is made of the highest grade 7-series alloy, but still gives way to the steel frame Apple uses in the iPhone X. Thus, analysts are expecting Apple to pierce through the $100 billion quarterly revenue barrier next year, riding on the wings of the iPhone X and its sucessors' gross margin, and it will be the first company in history to do so, barring any unforeseen troubles with Apple's newest handset.


Related phones

iPhone X
  • Display 5.8" 1125 x 2436 pixels
  • Camera 12 MP / 7 MP front
  • Processor Apple A11 Bionic, Hexa-core, 2390 MHz
  • Storage 256 GB
  • Battery 2716 mAh(21h 3G talk time)
iPhone 8
  • Display 4.7" 750 x 1334 pixels
  • Camera 12 MP / 7 MP front
  • Processor Apple A11 Bionic, Hexa-core, 2390 MHz
  • Storage 256 GB
  • Battery 1821 mAh(14h talk time)

FEATURED VIDEO

44 Comments

1. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

R&D army coming to defend Apple against Android terminators.

4. Peacetoall unregistered

Apple only spends 2% of their profit in R&D.

26. Well-Manicured-Man

Posts: 711; Member since: Jun 16, 2015

No discussion. All flagship devices are heavily overpriced at launch. But at least Android flagships are getting cheaper over time so that a rational buyer waits a few months before he purchases. Apart from that, I feel that all 2017 flagships are too much of a compromise. Won’t buy any device this year. If I had to buy right now, I would buy Galaxy S8. It is 500€ on Amazon which seems to be a fair price.

30. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

You are so right! I have a oneplus 3...I'm still happy with it. In my 1 year of ownership, I have noticed only a few crashes and slowdowns, and I'm a heavy user. Now, I'm not one to look for an expensive device...I can if I want to, but the cheaper ones are doing everything right, that for me, it's not worth it to pay more just for the joy of holding a flagship.

41. uncle_gadget

Posts: 1050; Member since: Sep 20, 2017

What compromise does the S8 and Note 8 have in design and features? Please list them, so we all understand what the heck you;re talkign about.

2. haruken

Posts: 308; Member since: Nov 06, 2013

Get money Samsung!

6. lazarus_26

Posts: 39; Member since: Sep 29, 2014

but it has best display====>according to displaymate and best camera in photo====>according to dxomark so I don't care!

7. Peacetoall unregistered

Apple fanboys - But but but super amoled panel are unsaturated , cartoonish and even suffers from burn in. Until apple implemented it in their iphone x and now its the best display ever. LOL

11. lazarus_26

Posts: 39; Member since: Sep 29, 2014

And SAMSUNG fanboys: Displaymate is not authentic any more!

14. Peacetoall unregistered

Who said it isn't authentic lmao

31. cmdacos

Posts: 4319; Member since: Nov 01, 2016

Just as Apple fanatics said displaymate and dxomark were invalid before... User preferences are much different then these technical scores. I turned on True Tone the other day and everything went orange so Apple's tweaking of calibration in their screens is only a win of you excuse its faults.

35. microsoftnokiawin

Posts: 1268; Member since: Mar 30, 2012

Dxomark is definitely unreliable that has been proven time and time again !

42. uncle_gadget

Posts: 1050; Member since: Sep 20, 2017

But even Apple acknowledges it has the same oversaturated colors, cartoonish effects and suffers from burn-in. Even though Apple worked with Samsung on this display, its Samsung technology that made it what it is, which shows they are the best at what they do. So even if they never give Samsung credit, which Apple and the fanboys never will, Samsung should be praised here. After all, Apple could have used LG. Lg OLED panels suck so Apple went with the best and got the best. With Samsung you get what you pay for. If Apple paid $110 per panel, then it explains why they paid so much.

15. worldpeace

Posts: 3135; Member since: Apr 15, 2016

Overall score still below Pixel 2 and if you look at Supersaf's camera review, iPhoneX's camere still behind note8

32. cmdacos

Posts: 4319; Member since: Nov 01, 2016

And behind iPhone 8 based on what I saw. IP eks was noticeably darker and inconsistent in comparison to the ip8.

36. tedkord

Posts: 17463; Member since: Jun 17, 2009

The pixel 2 had the best camera according to DXO.

8. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

So when you build a house you only take in account the materials needed to be built and thats the price of it? Architect, engineers, licences, building it, unexpected costs, and various other costs are not going to be considered right? I seriously think this kind of articles not from PA but generally speaking mislead people and create the stupid hate that Android fans have towards apple and vise versa. Its like saying mercedes only spends 10.000$ to make an S class cause thats how much all the parts cost.

10. Kibzara

Posts: 124; Member since: Feb 24, 2016

looooool, and how much it cost to build a NOTE 8, and it's still cheaper than that garbage of an iphone X... and they have all of your stated stuff integeratet in that same price! love seeing you being ripped of by a company that does not give a single F about you, only your wallet...

12. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Next innovation: OEMs will market their phones lower than a midrange phone.

13. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

I am not comparing it to note 8, I am just stating the fact that materials only is not the only cost to build a phone, its not the only cost to build anything. Actually labor and other costs usually overshadow the parts cost in most aspects of life.

20. Kibzara

Posts: 124; Member since: Feb 24, 2016

So other OEM's dont have these obligations, is that what you are trying to say?? And all of them are investing only in materials??

33. AxelFoley unregistered

And every other company has those exact same costs. Yet, they aren't charging the mark-up that Apple charges. I understand what Apple is doing. What I will never understand is the people that come to PA and cheer their profits. "Yaaay, I just paid $1200 for a $350 phone. Go Apple!" I've never seen people cheer the profits for airlines or oil companies. Like ,"yay, good job on those bag fees." But, I guess flying planes isn't the only cost to run an airline. There is also labor.

37. tedkord

Posts: 17463; Member since: Jun 17, 2009

Labor is a miniscule part of mass produced products, especially when made in China. Even if they made the phone in the US, labor would likely amount to less than $30/unit.

43. AxelFoley unregistered

Labor is a cop-out argument for people trying to justify the mark-up. Even if payimg kids iin China was expensive, they can't explain how Apple makes so much profit on a 14% share of the market.

16. jeroome86

Posts: 2314; Member since: Apr 12, 2012

And here we go.

19. STS104

Posts: 2; Member since: Nov 07, 2017

"returns no less than 64% gross margin for Apple, compared to the iPhone 8's 59%. Needless to say, this doesn't include R&D expenses, or marketing and administrative costs, but these, in the case of Apple, usually stay in the 10-15% range anyway, even for a unique handset like the X" 10-15% from the iPhone X retail price ($1000)?

21. mootu

Posts: 1539; Member since: Mar 16, 2017

So at the end of the day after building, designing, manufacturing, marketing, hell everything and Apple is making a minimum of $500 per phone and the sheep will once again praise Apple for this extortion. Thats without taking into account the X costs a lot more in countries outside the US. Then there's the fact the phone is so weak you are almost forced to take AppleCare at another few hundred. Then thers the extra cost for fast/wireless charging. And yet the sheep will still praise the cult of Apple for scraping their wallets dry. Honestly from the outside looking in it's hilarious watching the stupidity of some people.

44. uncle_gadget

Posts: 1050; Member since: Sep 20, 2017

For the iPhone X, AppleCare+ should be included in the price. Break the back glass and its costs $550 to replace? Why? Because it is totally adhered to the rear panels and you can remove it. You have to replace the whole rear panel. Which means all the phones insides have to be moved. Which any repair shop can do for less than $550. Back panel for Note 8? $30. Self-installable. All you need is pry tools and a blow dryer. I bought a heat gun. Once the glass breaks its easy to remove because you can just break it more and scrap off the old glass, melt the adhesive and remove it. With the iPhone X, you have to 100% take the phone part, but the rear assembly and put all the stuff back. Its about 45-60 mins of work depending on experience. But it isn't $550 of work. For $550 Apple can just give a refurb.

23. mootu

Posts: 1539; Member since: Mar 16, 2017

"17. piyath (Posts: 1359; Member since: 23 Mar 2012) Says the stupid android sheep....lol Best design, Best design, best camera setup, best gesture based UI, best build quality, best speakers, only 3D camera in the world on a phone, best warranty/customer service and best 2nd hand value. Yes this phone is worth $1000." Best design - Lol Notch, huge camera bump, weakest glass on an iPhone. Best design - I'll give you that one, Samsung gets the credit. best camera setup - Pixel 2 and Hauwei Mate 10 beg to differ. best gesture based U - Only Ui they could have seeing as they robbed your buttons. best build quality - Strange as its been tested as the weakest iPhone ever built. best speakers - maybe, maybe not. only 3D camera in the world on a phone - Honor Magic released Jan 2017 full 3d facial mapping camera's. best warranty/customer service - your gonna need it seeing as it's made of tissue paper. best 2nd hand value - Yup because iPhone users are still that much in debt paying for their last pos they can't afford new. Yes this phone is worth $1000 - no phone is worth $1000, especially when they are making $500 minimum profit from you.

38. tedkord

Posts: 17463; Member since: Jun 17, 2009

Best gesture based UI - WebOS says thank you.

* Some comments have been hidden, because they don't meet the discussions rules.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.