Media alert: iPhone 8 Plus out-ships iPhone 8 in Q3 2017

Pablo Tucker
November 9, 2017

"Apple is clearly making a portfolio play here", he said in a statement accompanying the report.

"The iPhone X is the most expensive iPhone ever made, and it has the highest retail price tag of comparable flagship phones, catapulting the smartphone industry to an entirely new price point", IHS Markit said. And Apple released its iPhone 8 handset at the end of the quarter, meaning it was likely too soon for iPhone sales to impact overall shipment growth.

So, yeah... that's basically why the iPhone X is so expensive. They also noted that the screen-to-body ratio and battery capacity "increased dramatically" between the 3GS and 4, and the same is happening again between the iPhone 8 and X.

Apple CEO Tim Cook is famously dismissive of cost estimates like the one published by IHS.

The standout feature on the iPhone X is Face ID, a facial recognition system that takes the place of Touch ID for unlocking the phone and authenticating payments.

It's a complex assembly that uses components from many suppliers.

Another area of interest identified by through iPhone X teardown has to do with video. The flood illuminator is an IR emitter from Texas Instruments built on an application-specific integrated circuit (ASIC) and single-photon avalanche diode detector from ST Microelectronics.

When put together, the BOM for the TrueDepth Sensor cluster costs a total of $16.70, HIS Markit estimates. "For instance, the assemblage and test of the Texas Instruments and ST Microelectronics subsystem for the flood illuminator is far from trivial and requires a high number of test equipment pieces".

Although Apple has dismissed the bill of material analysis as being an inaccurate representation of the cost it incurs in producing its smartphone, we believe that year-over-year comparisons (from the same research firm) do provide a sense of how Apple's gross margins could trend.

Smartphone shipments in the U.S. dipped 2% year-over-year (YoY) in Q3 2017 to 39.5 million units, down from 6% YoY growth and 40 million units in the year-ago quarter, according to Strategy Analytics. The South Korean manufacturer's Galaxy J2 Prime sold a total of 7.8 million units in the quarter, possibly due to demands from developing countries. Mobile carriers aren't expected to roll 5G technology out widely until 2020, which means the iPhone X is ahead of its time. "Apple is executing well on its strategy with a truly unique iPhone".

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