HOW CAN COMPANIES MAKE PHONES CHEAPER

[Agena_]

Hi, i have a question

how can companies like samsung and apple make their phones cheaper.

 

what would they have to sacrifice?

 

Thanks

[da na]

They would have to sacrifice the insane amount of profit they make off those things. For example, the first Apple Watch cost Apple $12 usd to manufacture, but it sold for several hundred.

The iPhone 12's manufacturing cost is $373, but isn't it over a thousand for sale? Most companies make 200-300% profit at least from phones.

[Helpful Tech Witch]

I'd rather apple just pay their workers instead of making like 700$ in profit for every 1000$ phone.

[minibois]

Companies like Apple can definitely make phones cheaper, but with the sales numbers we see them making I don't think they have reason to do so.

 

Judging a phone from Samsung vs. smaller companies (i.e. Xiaomi, Honor, Nokia, Motorola, etc.) it seems clear they cheap out on "expensive materials" (i.e. glass and metal), don't add too much to their OS experience and have little to no traditional marketing.

That is probably something Samsung or Apple could do, but those are also the primary reasons people seem to buy those brands, so it would be losing their signature on the market.

[Kilrah]

Rule #1 of marketing is that you don't price something based on what it costs to make, but on what people are ready to pay for it. 

High end phones are expensive because enough people will happily pay those prices. Complexity and manufacturing costs haven't really increased from when high end phones were $600 to when they got to $1000+, manufacturers just tried to see if people would pay higher prices, and they did...

[TetraSky]

11 minutes ago, Agena_ said:

what would they have to sacrifice?

 

Their profit margin,

That's it.

[Biomecanoid]

40 minutes ago, Agena_ said:

Hi, i have a question

how can companies like samsung and apple make their phones cheaper.

 

what would they have to sacrifice?

 

Thanks

If we stop buying them, they will eventually realize that they have to drop their prices

[DavidKalinowski]

Samsung does make cheaper phones. Galaxy A series for example the A31 can be had for around 220 USD, the Iphone SE is 399 USD from apple. So they do make cheaper options, they just don't advertise them, its like Chevy advertising the corvette, that draws customers into the show room, but they ending going home in an equinox.

[LAwLz]

2 hours ago, wat3rmelon_man2 said:

They would have to sacrifice the insane amount of profit they make off those things. For example, the first Apple Watch cost Apple $12 usd to manufacture, but it sold for several hundred.

The iPhone 12's manufacturing cost is $373, but isn't it over a thousand for sale? Most companies make 200-300% profit at least from phones.

Ehm... 12 dollars for the Apple Watch? I think you messed up some numbers somewhere.

The IHS analysis put the BOM of the cheapest Apple Watch at $81.20. That's without any R&D or software patent fees.

 

A lot of companies has massive profit margins on their products, but the idea that an Apple Watch costs 12 dollars to make is bonkers.

Here is the full list of components and estimated costs of each one for the first Apple Watch.

[WillOfTheLand]

2 hours ago, wat3rmelon_man2 said:

They would have to sacrifice the insane amount of profit they make off those things. For example, the first Apple Watch cost Apple $12 usd to manufacture, but it sold for several hundred.

The iPhone 12's manufacturing cost is $373, but isn't it over a thousand for sale? Most companies make 200-300% profit at least from phones.

This. It's the same with prices on everything these days, I worked at grocery stores where the markup on things like fruits and vegetables would be as much as 4-500% or even more some times, during holidays that turnip you payed $14 for to go with your christmas dinner the store would have payed $2 for. Then you'd have bottles of pop being sold at cost. The only way you see prices on something come down is if they know you can go without and aren't going to pay a fortune for it.

 

Yeah you have to take into account the cost of refrigeration and shelf life with products like that, but if they had a reason to sell cheaper, they could.

[Zodiark1593]

25 minutes ago, LAwLz said:

Ehm... 12 dollars for the Apple Watch? I think you messed up some numbers somewhere.

The IHS analysis put the BOM of the cheapest Apple Watch at $81.20. That's without any R&D or software patent fees.

 

A lot of companies has massive profit margins on their products, but the idea that an Apple Watch costs 12 dollars to make is bonkers.

Here is the full list of components and estimated costs of each one for the first Apple Watch.

Apple in particular uses manufacturing processes that ordinarily wouldn’t make a lot of sense for mass production. CNC machines are great for prototyping and small runs, but you need a building full of the things to do mass production, which is exactly what Apple had done. 

 

Further, custom silicon is extremely expensive from an R&D standpoint. Apple probably tops the list for R&D expenditures here, though Samsung has Exynos as well. 

[freeagent]

I think one of the reasons why Apple has high prices is not just for the hardware, but you are pre paying for their software development too. Every few months iOS gets an update. Because a phone replacement or ipad replacement is usually half the cost of the device. If you pay for AppleCare you are in essence pre paying for any repairs. If you bring your phone in, they make your phone nice again, like when you bring your Rolex in for service, you pay.. but your old watch is new again.

 

I took a corner too tight and banged my phone against the door frame. It was pretty hard.. put a pinhole in my back glass, that is a 600usd part lol. AppleCare will cover it, and while they are at it they can replace my front glass too. And since its already open, I would pay for a new battery, since mine is at 97% after about a year.. And do it again next year lol.

 

I do have my case back on.. because it does suck when you damage something nice.

[papajo]

4 hours ago, Agena_ said:

Hi, i have a question

how can companies like samsung and apple make their phones cheaper.

 

what would they have to sacrifice?

 

Thanks

Nothing the phones are already cheap to manufacture you are just paying the iphone tax lol  (same goes with any other phone) 

 

they are devices compromised of a small screen a small battery and a small PCB and manufactured at sweatshops at a huge scale (which add to reducing the cost) so there isnt much to make them expensive other than "you want that phone so badly" 

[Middcore]

They don't want to make them cheaper. 

[LogicalDrm]

-> Moved to Phones and Tablets

[Donut417]

11 hours ago, Agena_ said:

Hi, i have a question

how can companies like samsung and apple make their phones cheaper.

 

what would they have to sacrifice?

 

Thanks

Firstly Samsung does have cheaper  phones available, the S and Note series are just the "High" end models. Apple has the SE which is its "Cheaper" version. The fact is they price their phones at what the market can bare. People are willing to drop $1K on a phone, so thats how they price them. 

[Roswell]

9 hours ago, papajo said:

Nothing the phones are already cheap to manufacture you are just paying the iphone tax lol  (same goes with any other phone) 

 

they are devices compromised of a small screen a small battery and a small PCB and manufactured at sweatshops at a huge scale (which add to reducing the cost) so there isnt much to make them expensive other than "you want that phone so badly" 

Material cost is a fraction of what it costs to sell each unit. You're cutting out like 90% of the picture. R&D, shipping, employment, factories, advertising and so on absolutely dwarf the cost of components for each unit sold.

[papajo]

16 hours ago, Vitamanic said:

Material cost is a fraction of what it costs to sell each unit. You're cutting out like 90% of the picture. R&D, shipping, employment, factories, advertising and so on absolutely dwarf the cost of components for each unit sold.

I hear the "low hanging fruit" excuse of RnD all the time.... 

 

 

RnD in digital computers on traditional platforms/processes (an exception to that would be quantum computing where we dont know how we gonna even tackle it and several different approaches take place etc) is a constant cost. 

 

Which means that it mostly compromises out of the paychecks you pay your RnD team each year its not like to get "faster" chips you have to spent more... chips are just a design and people (namely mathematicians and engineers) spend time on figuring out how to design it better. 

 

So your RnD cost is months * paychecks* employees or in other words this years RnD costs were the same as last years and so on and so forth (unless you start to hire a huge amount of people which your company didnt have last year) 

 

That's why computers and electronics in general advance so fast. 

 

RnD is expensive when you deal with practical issues e.g how to make a faster aircraft... because its not just designs you have to make prototypes safety checks the prototype probably is going to prove that there are flaws in the design again more time spend then creating a new prototype which again may fail and indicate it needs a particular part that is not produced yet so you have to design that part and manufacture it create a new prototype then maybe you realize you need a different sort of specialists you had not in your payroll yet to hire them for the process of that "special" part etc 

 

In CPUs you just run the simulation if there is a flaw you spend some time (which you already paid as a company since you pay your employees per month or per year) then you just make a prototype wafer (less than a few K) analyze that under a microscope to see if there are any imperfections in the process and then just proceed to mass production.  <--- and that's IF you do your chips in house.. most companies just buy ready designs from others. 

 

Same goes for motherboards. 

 

As for all the other things you mentioned its all part of the scale of production the bigger the production the more efficient and cheaper these things become  this phone for example that was manufactured on 2016 had a retail price of 3.51 dollars.... https://en.wikipedia.org/wiki/Freedom_251

[Roswell]

38 minutes ago, papajo said:

I hear the "low hanging fruit" excuse of RnD all the time.... 

 

 

RnD in digital computers on traditional platforms/processes (an exception to that would be quantum computing where we dont know how we gonna even tackle it and several different approaches take place etc) is a constant cost. 

 

Which means that it mostly compromises out of the paychecks you pay your RnD team each year its not like to get "faster" chips you have to spent more... chips are just a design and people (namely mathematicians and engineers) spend time on figuring out how to design it better. 

 

So your RnD cost is months * paychecks* employees or in other words this years RnD costs were the same as last years and so on and so forth (unless you start to hire a huge amount of people which your company didnt have last year) 

 

That's why computers and electronics in general advance so fast. 

 

RnD is expensive when you deal with practical issues e.g how to make a faster aircraft... because its not just designs you have to make prototypes safety checks the prototype probably is going to prove that there are flaws in the design again more time spend then creating a new prototype which again may fail and indicate it needs a particular part that is not produced yet so you have to design that part and manufacture it create a new prototype then maybe you realize you need a different sort of specialists you had not in your payroll yet to hire them for the process of that "special" part etc 

 

In CPUs you just run the simulation if there is a flaw you spend some time (which you already paid as a company since you pay your employees per month or per year) then you just make a prototype wafer (less than a few K) analyze that under a microscope to see if there are any imperfections in the process and then just proceed to mass production.  <--- and that's IF you do your chips in house.. most companies just buy ready designs from others. 

 

Same goes for motherboards. 

 

As for all the other things you mentioned its all part of the scale of production the bigger the production the more efficient and cheaper these things become  this phone for example that was manufactured on 2016 had a retail price of 3.51 dollars.... https://en.wikipedia.org/wiki/Freedom_251

This is a mess and wildly wrong.

 

Look up the publicly available financial statements for these companies. Apple alone spent nearly $20 billion on R&D last year. 
 

 

[papajo]

50 minutes ago, Vitamanic said:

This is a mess and wildly wrong.

 

Look up the publicly available financial statements for these companies. Apple alone spent nearly $20 billion on R&D last year. 
 

 

It doesnt make sense if you want it to not make sense if you start paying attention to it and think about it then it will...

 

Besides that apple being a  2  trillion company and 20 billion being like 1% of its networth. Apple has its hands on ton of other stuff not just phones (so those RnD figures are not meant to be for the phone market solely) and last but not least it spent 18 Billion(20 billion accounting for inflation)  last year and 16 billion (18 accounting for inflation) the year before that so again it's both miniscule compared to their revenue and the difference from year per year is marginal 

 

and on top of that many companies stash as much money on "RnD" statements because they can (legally) taxevade that way since there are RnD credits (meaning the more you spend on RnD the less taxes you pay) 

[Roswell]

1 hour ago, papajo said:

It doesnt make sense if you want it to not make sense if you start paying attention to it and think about it then it will...

 

Besides that apple being a  2  trillion company and 20 billion being like 1% of its networth. Apple has its hands on ton of other stuff not just phones (so those RnD figures are not meant to be for the phone market solely) and last but not least it spent 18 Billion(20 billion accounting for inflation)  last year and 16 billion (18 accounting for inflation) the year before that so again it's both miniscule compared to their revenue and the difference from year per year is marginal 

 

and on top of that many companies stash as much money on "RnD" statements because they can (legally) taxevade that way since there are RnD credits (meaning the more you spend on RnD the less taxes you pay) 

You really don’t grasp how this works. Apple in 2020 had 57 billion in net income over 274 billion in revenue. For every $1 they make, they need to spend more than $5 to make it happen.

 

So again, material cost is a fraction of the overall picture. 
 

Please just Google the financial reports of these companies, the information is freely available. It’s not rocket science.

[rice guru]

profit margins, move manufacturing to africa which is currently china's china and use more slave labor than they already do.  lose some of the big profit margins, QC would take a hit, build quality would take a hit , material costs adn quality would have to htake a hit. but we already have cheap and budget phones they just dont perform nearly as well as the top high end phones but get you there, these days theya re built well adn have near if not the same performance as phone made 3 years prior.  in regards to samsung phones software support is just kinda ass

[Nena Trinity]

1. Profit margin

2. Cut R&D

3. Cheaper parts

4. Offer production to lowest bidder 

[papajo]

16 hours ago, Vitamanic said:

You really don’t grasp how this works. Apple in 2020 had 57 billion in net income over 274 billion in revenue. For every $1 they make, they need to spend more than $5 to make it happen.

 

So again, material cost is a fraction of the overall picture. 
 

Please just Google the financial reports of these companies, the information is freely available. It’s not rocket science.

You think  googling financial reports makes you able to understand something when you obviously do not have the slightest grasp of how our societies and economies work .

 

its not just a + and - calculation of the figures you are watching but having said that you are still not able to calculate even the figures you are talking about (if it had to sepnt $5 to make $1 -which again is not how things work but anyway I just entertain your idea- would mean that their operational + rnd costs would be 5 times their income... which is not even close to the case what they state -which doesnt necessarily to be true- is that it is about 10% their revenue. so for every 10$ they make they sepnd 1$)  

 

Last but not least Apples networth is 2 trillion dollars (2.000.000.000.000) if they needed to spent 5 to 1 to accumulate such amount that means that they would need 10.000.000.000.000 

 

Companies dont reach 2 trillion netowrth without having ridiculous profits its simply not possible otherwise... entire countries (compromised by people who work selflesly for the good of their country so without the need of compensations or profit) have smaller networth than that..........that is because they dont have the magic iphone.. I mean pill to give them huge profits per sale. 

 

So stop talking like you understand what you are saying and trying again and again to counter argue coming from different cornes.. each corner will be wrong because you dont really understand what you are talking about and just google things to try to somehow figure out how to counter argue. 

[papajo]

2 hours ago, Triedtotypetheshrugemoji said:

Does make sense. Apples income according to them is 274 billion and the profit is 57. 274/57 is roughly 5 so for every $1 they make they spend $5 on operating the company.

 No, it doesnt it may make sense to you because you cant bother understanding the intricacies and want it to be that way in the same financial statement it lists what their expenses revenue is the total income they receive by primary sales (and here lets not forget that those statements are made by professional agencies with target to eliminate as many taxes and fees as possible all companies and rich people do that not just apple, just as a reference if you are new to this world and believe everything is done by the book https://www.dw.com/en/apple-ireland-tax-avoidance/a-54274213 ) 

 

but anyway a few sites under that one the expenses are stated as well so yea less than 10% in total including RND , now why is revenue so smaller than net income as said above is a complex procedure that needs an very lengthy audit done by equally experienced professionals just to make sense of it which even I couldnt do properly even if I was hired to do that and it is out of the scope of this topic anyway. 

 

But it is not magic and at the end of the day its you cant hide the elephant on the room. Apple was on the bridge of collapse in the 90s and since about mid 2000s they started to become profitable and now they are a 2 triillion networth company! 

 

Networth is what you have minus what you owe (so any grands,loans,financing and budgets etc for things you have not yet paid off do not count in that) 

 

So in other word it is the total wealth of apple. 

 

If their only profit was e.g 50 million dollars per year they would need 40 years to surmount to a 2 trillion dollar networth. and that is the easiest way to make you see that its more than meets the eye. (and mind that in those financial statements you google and think that "that's all shw wrote" apple didnt have as big of a net income all those years back to the mid 2000s so the 40 years calculation is a best case scenario of a bestcase scenario) 

 

Everything else is just trying to find a joker in the cards.