Why Pay $749 For A Smartphone That Costs Just $225 To Produce?

A recent teardown of an iPhone 7 by IHS Markit revealed that the smartphone would cost only about $219.80 for its components and just $5 for its manufacturing cost. Comparing 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 survey comparing the price of a iPhone 7 and found that it would cost cheapest in Singapore ($749) and Malaysia ($900) but almost double the initial cost in Indonesia ($1,268) and Thailand ($1,340).

Taking in consideration each country's average income (assuming a person will be using 100% of its income to buy an iPhone), it would take a Vietnamese more than 104 days to afford an iPhone 7 and an Indonesian more than 87 days.

Any Loss of Interest?

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 is not available in SEA countries such as Indonesia, Philippines and Malaysia, we should see a similar trend as well.

So, if it costs about $225 to produce an iPhone 7, why are 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.

• Technological Innovation and R&D

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 his self 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 the 11th place in the United States alone. An iPhone owner is not paying $749 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 would mean you are 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 isn'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, 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) will agree on: Apple's IOS UI (user experience) is unrivalled and is much more secure than Androids. Though Android users has more freedom to personalise and able to 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.

Contribution to customer's satisfaction was better protection for its general users. 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 garner a loyal customer-base.

I am Jeremy and am currently residing in Kuala Lumpur, Malaysia. My interests includes Formula 1 (Team McLaren), Badminton, Church (Kingdomcity), Music (Vocalist & Electric Guitarist) & values good relationships. Jeremy is interested in topics per