What Do Your Gadgets Actually Cost To Build?
What Do Your Gadgets Actually Cost To Build?
Posted 02/14/2010 at 7:27pm
| by Justin Kerr
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Being a PC enthusiast and a gadget nerd go pretty much hand in hand, but have you ever wondered what it actually cost the manufacturers to assemble your army of iPod's and book reader's? Well wonder no longer because marketing research group iSuppli and Business Week have teamed up to tear down over 25 popular gadgets and have come up with what they consider a pretty accurate ball park picture of the manufacturing costs. Some of the results appear to be a bit out of date, particularly when it comes to the consoles, but it still gives a pretty good overview of how much money each product is raking in.
As you would expect most gaming consoles continue to sell at a loss, but many of the popular new smart phones actually make a fair bit of money when you factor in the kickbacks they probably get from the carriers. You can check out the full article to read about all 25 of the gadgets from the tear down, or review our sampling below for some of the more interesting snippets to save you time.
Gadgets
Apple iPad $499 MSRP - $219.35 Cost
Amazon Kindle $259 MSRP - $185.49 Cost
Phones
Apple iPhone 3GS $199 With Contract - $176.16
Google Nexus One $179 With Contract - $174 Cost
Motorola Droid $199 With Contract - $185 Cost
Palm Pre $200 With Contract - $137.83 Cost
Blackberry Bold $300 With Contract - $169.41 Cost
Consoles
Microsoft Xbox 360 $399 MSRP - $470 Cost
Sony Playstation 3 60GB $599 MSRP - $840 Cost
Any of these prices surprise you?
More like this
Nickgrnt
June 18, 2011 at 9:47pm
I really don't know what the gadgets actually cost to built, however, I am sure that nowadays the technology is getting more and more futuristic and is worth the money we pay. The two phones iPhone and Samsung Galaxy S are the worth the price. I own the Blackberry Bold 9780 and Samsung Galaxy S and must say the quality and features included in it are worth the price I have paid.
imagonex
February 15, 2010 at 8:43am
The iPad appears to have the highest profit margin. 56% profit or approximately $279.
It would've be nice to see the "actual cost" vs "retail price" of Apple PC's vs other brandnames such as DELL, HP and others. I wouldn't be surprised if their Macintosh PC's also have a higher profit (or markup) than the competition. Apple is notorious for marking up their products more than others.
thematejka
February 15, 2010 at 12:48am
never mind the game prices of x360 and such, but it's not the only way microsoft makes money lost on selling their consoles so cheap. Vendors have to pay microsoft just to have the xbox name, brand, and picture on their games, for every single individual game. If a game sells 1000000 copies, and ms makes $2 a game on just the logo being on it, ms makes an easy 2 million. Which makes up for the low price console sales by far
MRrelabled
February 14, 2010 at 11:54pm
I wouldn't think costs are a constant, first production costs more but later production is profit.
avenger48
February 14, 2010 at 9:03pm
They haven't made a 60GB PS3 for 3 years, and they no longer make a $400 X360 SKU. Also, last I checked, a PS3 slim's components totaled to ~$325. As for the other devices, I suspect that only the newer ones are accurate, although I don't really know.
EDIT: just noticed that you noted this. You may just want to remove the consoles, as they are ludicrously out of date.
From Businessweek: "
Sony
PlayStation 3
Date: Nov. 17, 2006"
yeah....
bikerbub
February 15, 2010 at 5:07am
microsoft is losing money with the 360. With the number of failures they have to repair, there's no way they're making money on the consoles. They do, however, probably make up for it with Xbox live, whereas sony is losing money on both the console and PSN.
Walnut
February 15, 2010 at 9:09am
The failure rates on the new chipsets are WELL below launch rates. The last figure I saw pegged it at no higher than 4%, and that was at least a year ago.
fuzz_64
February 14, 2010 at 8:53pm
Surely those console prices are wrong, no? I recall seeing similar cost numbers several years ago.. they've had a few years to get the prices down.. I can buy a PS3 in Canada for $299 (not sure where the article's MSRP of $599 comes from) so SURELY they're not losing around $600 CAD per unit?!?!?!
avenger48
February 14, 2010 at 9:01pm
$599 was the original, launch, 60gb PS3 price. This SKU hasn't been produced for around 3 years. I believe they lose a small amount on the $299 slim's, but actually make around $50-$75 USD on the 500GB slim's.
The reason for the price reduction has been feature-cutting, (hardware backwards compatibility, card readers, etc.) and just general price drops on components (laptop hard drives, cell processors, RAM, blu-ray drives, all have gotten cheaper since 2007.)
QuakindudeMod
February 15, 2010 at 7:28am
You have to keep in mind that consoles are like gas stations. They make little to no money on the gas, but it's what's inside the store that counts.
Consoles have, for the last five years +, cost more to make than what they sold for. And that reason has already been explained here. The games, online services and equipment are what they make their money from. I would certainly sell my $20,000 car for $15,000 if I knew I could make another $30,000 down the road in maintenance and "add-ons."
The cost of the consoles when they first launched are very integral to the story line. The prices of the other objects are also from when they first launched, so you have to keep data integrity by showing the same prices for all items during their life time.
If Microsoft and Sony are making $$$ on the consoles they sell today, I would be surprised. They've cut corners, removed features and brought the basic console price down only to get your ass when you upgrade or add on to it with more controllers, larger hard drives, memory cards, wireless dongles (In the case of the Xbox) and games. But also, the cost of making them has come down too, so the gap of losses has lessened I'm sure. But like I said, I bet they aren't making any money off the consoles just yet. From the beginning, the consoles were sold for less than what they cost them to manufacture. You still have to factor in the cost of all the R&D that went into each console.
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optionboy16
February 15, 2010 at 6:55pm
What I REALLY want to know is how much is a controller? Headset? Battery charger? Wireless adapater? Overall costs of Xbox live maintenance is? What about those hard drives?
I've bought all of those things, plus whatever was on the Xbox Live/Zune store...I didn't have cable for a year. I guarantee you, Microsoft is in the black from me...
riopato
February 14, 2010 at 7:57pm
Looks like you really get what you pay for! Good job Sony and Microsoft! Now about those game prices....
nekollx
February 15, 2010 at 9:24am
you mean their only way to break even?
------------------------------
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To0nces
February 15, 2010 at 10:06am
Game prices went artifically up for the current gen. Xbox 1 already had live, and it was 50 dollars a year. Plus, they sell tons more content on Xbox Live for the 360 then they ever did with Xbox 1. They pushed the pricing of games into the $59.99 range when it had been $49.99 for years. Yes, the tech is more advanced now, but you have to remember that when the old gen consoles came out, even that meager tech was still new and costly for its time. $59.99 price tags are just to squeeze blood from a turnip.
nekollx
February 15, 2010 at 10:10am
Right and what could $50 get you 6 years ago. I'll wait.
You see theres this little thing called Inflation. It's why our Comic books cost $3.25 now instead of $0.10...
------------------------------
Coming soon to Lulu.com --Tokusatsu Heroes--
Five teenagers, one alien ghost, a robot, and the fate of the world.
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