Despite its unprecedented price, the iPhone X might not be making big money for Apple.
Analysts from the Susquehanna International Group estimate that despite the phone's $1,000 price tag, Apple may make less on the sale of an iPhone X than it has on phones of the past.
According to the Wall Street Journal:
The starting price of the new flagship iPhone X is about 50% more than the $650 starting price of last year's iPhone 7 [but] the components cost an estimated $581, up from $248 for components in the iPhone 7, according to Susquehanna International Group. The gap suggests Apple's profit margins on the new device are slimmer than on existing lines.
Analyst estimates are far from infallible, but this suggests the assumption is at least close to true and that Apple isn't making bank on its expensive new iPhone. The thing is, short-term profit is probably not what the iPhone X is made for. In fact, Apple would be wise to be wary of selling too many at the moment. Here's why.
It can be hard to wrap your head around exactly how many iPhones Apple sells. Last year, in the fall and holiday after the reveal of the iPhone 7, Apple sold 78.29 million phones. After the iPhone 6, it sold 74.47 million, and after the 6S, 74.78 million. Since 2015, Apple has never sold fewer than 40 million phones in any three-month window. The ridiculously large scale at which Apple operates requires a ludicrous amount of supply line management, CEO Tim Cook's specialty, to ensure the raw materials required can be had in the necessary quantity, much less transformed into phones on the tight schedule required.
FACE ID ON A LAPTOP COULD MEAN NEVER HAVING TO LOGIN AGAIN
The iPhone X is a bigger departure than ever before. Not only is the screen larger, with thinner bezels, and in a shape and size unlike any other phone. It's also carrying a higher-quality but more expensive technology, OLED. Reports suggest that the entire reason for the delay before the iPhone X launches is due to trouble scraping up enough OLED displays.
Apple's thousand-dollar iPhone may not sell nearly as well as cheaper and older versions do. That's good for Apple—it simply can't make that many iPhone Xs right now. But selling a (relatively) small number will help Apple to establish the supply chain that, someday, could make these components better, faster, and cheaper, and perhaps a part of every iPhone.
What's more is that the iPhone X's biggest feature, Face ID, is untested in the wild. Apple has a pretty fantastic history of taking busted tech and making it seamless (look no further than Touch ID), but there's no substitute for a wide-scale test. What better subset of testers than the diehards who are willing to pay top dollar to stay on the cutting edge? Especially if there are kinks to be worked out before Face ID makes its way to all the other obvious products that it's likely destined for, like future redesigned iPhones or Apple's wide world of Macs. After all, Face ID on a phone might just be a replacement for Touch ID, but Face ID on a laptop could mean never having to login again.
None of this makes the iPhone X a good thing for anyone to buy. In fact, there's never been a worse time to upgrade to a brand new phone when you could just buy an older model instead. But don't mistake the iPhone X as just a ploy to prop up prices for a plumper profit. Chances are there are much bigger plans at play.
http://www.popularmechanics.com/technology/gadgets/news/a28245/iphone-x-cost-supply-chain/
