Where the iPhone beats Samsung's Galaxy S4

Samsung's Galaxy S4 smartphone / Sarah Tew/CNET

(MoneyWatch) Samsung's Galaxy S4 smartphone may have garnered all the headlines in recent weeks, but Apple (AAPL) retains one key advantage over its rival: The iPhone is far cheaper to make.

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Samsung Galaxy S4 hands on demo

A new estimate by HIS iSuppli suggests that the new Samsung Galaxy S4 is one expensive phone compared to the iPhone. That means Apple will have more profit and, as a result, more money available from the smartphone business for innovation, marketing, support and price competition.

According to a previous teardown by iSuppli, the lowest-end Apple iPhone 5 with 16GB of storage costs $196 to manufacture, including materials. The cost for the 32GB version is estimated at $217, while the 64GB version runs $238.

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The teardown of the Samsung Galaxy S4 estimates the cost of the 16GB model at $244 for the high-speed packet access version (a 4G mobile standard), with $236 going for materials and $8.50 for manufacturing. That means Samsung's flagship phone costs roughly $48 more per unit to make than the equivalent iPhone. The LTE version of the S4, with 16GB, is $3 cheaper

IHS acknowledges its estimate of the manufacturing costs for the Galaxy S4 isn't definitive and notes that it could change after the firm actually takes the device apart. Yet this preliminary estimate suggests the company's costs for the S4 are significantly greater than for the S3, which cost $213.

"Although [the S4's] hardware is not radically different from the Galaxy S III introduced in April of 2012, the Samsung Galaxy S4 includes some critical component updates that enhance its functionality as well as its BOM cost," said Vincent Leung, senior analyst for cost benchmarking at IHS, in a statement. "Among the upgrades are a larger, full high-definition display; a beefed-up Samsung processor; and a wealth of new sensors that set a record high for the number of such devices in a smartphone design."

Samsung's higher costs to Apple's advantage, whether in keeping stable prices for carriers, funnel money back into future product development or marketing the iPhone.

[ssalazar77]

The Iphone 5 is smaller and doesn't have NFC, which is an additional antenna/feature built into the phone.

This article is comparing the two phones as if they had the same specs.

Why not say that 40 inch tv are cheaper to make than 42 inch TVs. It is a similar argument.

A 1000 sq. ft house, is cheaper than 1200 sq. ft. house.

When apple makes a 4.6 or bigger phone I'm confident their costs will go up. It's not rocket science. Lame article.

[MediaCritiquer_DotCom]

Wow. So you're saying that a phone with bigger and more advanced features costs more to make than an older phone? What. A. Waste. Of. Time.

[blahblah2489]

Since when was a more cheaply made phone a bonus feature?! The iPhone 5 is the biggest P.O.S. to come out of Apple! Try owning a phone with actual additional features the the S4 instead of waiting for the iPhone 5s who's only additional feature is the addition of 4G lte which Android has been running for about 4-5 years now! Way to FINALLY jump on the bandwagon Apple!!

[LouZerpa]

You are speaking out of your a$$ There is nothing the Scamsung 4 can do that the iPhone 5 can't do. All you need to do is download 3 free Apps from the App Store, and you get all the new features in the S4.
Hell will freeze over before the koreans are better than the americans innovating. They just know how to imitate.

[mormomboy]

So the only thing it beets the andoid with is the amount of money that apple will make per unit? Go samsung for making a higher quality phone.

[HorseShat]

I haven't heard of Samsung's workers jumping out of the buildings to kill themselves I know that much! This is a pointless article. If they were making the exact same product with the exact same specifications then it would be valid. Samsung has a bigger screen, more sensors, a faster processor, and more RAM. Of course it will cost more for materials and to manufacture it! It will sell more volume and overall make a larger profit also. Apple has a better profit margin per unit, if I was buying an iPhone I might be inclined to ask for a reduced price on the unit I was buying. As far as more of the money staying in the United States don't even get me started on Apple's tax dodging loopholes!

[GuyBannis]

@Horseshat: if you're worried about US taxes, why are you supporting a Korean company?

BTW, Samsung also contracts with Foxconn.

[Jleroy68]

Well and I was worried this was yet another "iPhone killer" whew, we dodged a bullet here. But they may update this thing within the year keeping it only about a year behind. I feel we should give Mr Schiller a free pass for another well deserved tirade.

Read more: http://www.digitaltrends.com/mobile/apps-that-will-turn-your-android-phone-into-a-galaxy-s4/#ixzz2OC8EmaS7
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[tcato-2009]

I hate two year contracts! I don't care about their bottom line cost. The only thing that matters to us is being forced into a two year contact!

[hypnotoad72]

Well, this is the free market - find a carrier that gives you a generous gift of a deal with a lower price phone but doesn't lock you in.

Oh, they don't exist due to collusion by the wireless telco companies? *sniffle* Boo. Hoo. To you. Lump it up like how the rest of us have to, since it's their profits that matter and they need us - in one form or another, as customers or as taxpayers - to obtain it.

Especially AT&T:
http://www.ctj.org/html/layoffs.htm

[dachard]

Good that we customers don't care about this crap, we're paying for what we want and that is it. All phones are cheap anyway if you compare it how much money you would spend for other things. You're using it whole day, can't live without it and it should be normal to pay $500 each year for new model or $1000 for model that could last for two years.

[bobnjersey]

[You're using it whole day, can't live without it and it should be normal to pay $500 each year for new model or $1000 for model that could last for two years.]
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that's not normal ... but that's what 'they' want you to believe.

you shouldn't be staring at it all day ... you can live without it ... and you shouldn't be paying $1000 for it.

[Octopusonhead]

@DACHARD, wow you really sound like an fool.

Derp derp... let me swallow the phallus and load of the tech companies and think it's normal to be dishing out 500-1000 every year for a new model.

[j_flood]

The headline makes a definitive claim. The story clearly states the estimate is NOT definitive - but rather is speculative. NO Ed Morrow award again!!!

[Nate650]

Would be nice to see the BlackBerry Z10 thrown in the mix.