You see them after every Apple product launch — “breakdowns” of how much someone thinks the raw parts cost.
We’ve been ignoring them for a while now because, taken to the most ridiculous of extremes, they’re kind of like saying a human life is only worth the price of the water and minerals that make it up. The “bill of materials” or BOM, though, even in the rare cases where those parts are properly identified and priced, only tells part of the story. Tim Cook, Apple’s CEO, just said as much during the Q2 2015 conference call.
I haven’t even seen those, but generally there are cost breakdowns that come out around our products that are much different than the reality. I’ve never seen one that’s anywhere close to being accurate. And so, if that’s the basis of your comment, I’d really dig on the data if I were you.
It costs an enormous amount of money to bring a new product to market, and to manufacture new versions of products the way Apple chooses to manufacture them. Even if you choose to believe all of those costs are front-loaded, they still need to be amortized across the production run. Or, as Josh Lyman said on the West Wing:
The second pill cost ’em four cents; the first pill cost ’em four hundred million dollars.