A recent teardown of an iPhone 7 by IHS Markit revealed that the iPhone 7 cost an estimated amount of USD219.80 (SGD305) for its components and just USD5 (SGD7) for its manufacturing cost.
If we were to compare this with the previous iPhone models, Apple has spent more on its components this time.
As we would expect to see more iPhone users outside of the United States (as like previous iPhone models), the cost of the iPhone 7 will increase due to export/import costs, tax and fees imposed by local governments and others factors (currency, political, etc).
A study comparing the price of an iPhone 7 in a few Southeast Asian countries found that on average, it would cost cheapest in Singapore (S$1244) and Malaysia (S$1248) but cost much more in Philippines (S$1430), Indonesia (S$1758) and Thailand (S$1859).
Taking in consideration each countries’ average income (assuming a person use 100% of its income to buy an iPhone), it would take a Burmese more than 104 days to afford an iPhone 7 and an Indonesian more than 87 days.
Any Loss of Interest Yet?
As the first in Asia to sell the new smartphones, Singapore saw overnight campers and a large reception on its release. Not to mention that it was sold out on a global scale as well and Apple has yet to release its product to many other countries.
Though it’s not available in SEA countries such as Indonesia, Philippines and Malaysia, we can expect a similar trend as well.
So, if it costs about S$312 to produce an iPhone 7, why’re people coming in endless droves awaiting to own an iPhone that costs more than 3.4 times to make one?
Before we jump on the bandwagon hurling anti-iPhone insults, let’s examine closer and see why.
Real Technological Innovation and Research and Development
Setting itself as an ‘Innovation Company’, Apple spends most of its resources to research and development to create the most innovative products accessible to as many people as possible.
Tim Cook himself said that “not to innovate in business is to die” and this is the main mantra of the company.
In fact, Apple Inc was successfully awarded 1,938 patents in 2015 alone, making them 11th place in the United States alone. An iPhone owner is not paying S$1039 just for the materials, manufacturing cost and manpower, but for Apple’s years of R&D and technological innovation.
In other words, to own an iPhone means you’re supporting technological advancement that would further enable Apple to create greater products and services for consumers around the world.
New Features and An Evolutionary Product
Yes, the headphone jack is missing, but buyers are not paying more for less features. For the first time, the iPhone 7 is water resistant.
An evolution from iPhone 6s, Apple spent much of its resources waterproofing the device by adding additional gasketing around critical connectors while ensuring performance and reliability aren’t compromised.
Though IHS Markit’s teardown, it was evident Apple repositioned components such as the Wi-Fi antenna at the end of the primary speaker box, was for better reception and transmission while ensuring that it stays waterproof.
Other features includes an improved battery life to 1960mAhr, twin cameras for the iPhone 7 Plus, design improvements, increased base-model storage to 32GB and new high-tech modems from Intel Corp. Whatever it is, you’re not paying more for something less.
Superb User Experience, Better Security for General Users and Loyal Customer Base
Here’s something most smartphone users (including Android users) may agree on: Apple’s IOS UI (user experience) is unrivalled and is much more secured than Androids.
Though Android users have more freedom to personalise and save more money (smartphones with similar specs as iPhone), Google was least successful in winning their current users’ hearts.
A study by Retrevo revealed that 81% of iPhone owners will remain loyal to the brand while only 63% of Android users will stick to Google’s operating system. This is apparent that Apple’s IOS, hardware performance and customer service has successfully created a loyal customer base.
A large contributing factor to customer’s satisfaction was greater protection for its general users from viruses & malware. While not all users are security experts who knows what they’re doing when enabling and disabling privacy settings, Apple provides the simplest choice for “pretty good” security to all users. Great UI, simplistic yet great security and good hardware, all contributes to the perfect recipe to create a loyal customer.
What Does This Tell Us?
While the smartphone geek community is growing larger day by day it’s vital for brands to realise that majority mobile users are casual users.
These casual users might not understand the technological innovation behind the phone but values aspects such as user friendliness and features that would greatly assist their work or play.
Apple targets such users and this is apparent in their product offering and minimalistic design. Though Apple may not be jack of all trades, they’re certainly masters in perfecting the most practical smartphone.
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