Name: The True Cost of the iPhone
Uploaded: 2019-09-24T02:27:38.000Z
Duration: 12 min 54 s
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In August, its stock hit two-hundred and seven dollars, making it the first trillion dollar

Then, in a dramatic few months, it lost $450 billion as Microsoft, Amazon, and Alphabet

And for the first time in fifteen years, the company announced it would make less money

The reasons are many: China's slowing economy, sticker shock, market saturation.

But there's also another big factor: Apple has a new competitor.

The iPhone is increasingly competing with itself.

One, because we're all holding on to them longer.

But also because it doesn't cost what you think it does.

As the price of an iPhone goes up, something new is happening to its value, and it's

shaking up Apple's entire business model.

To understand what's really going on, we need to calculate the actual, hidden price

Generally speaking, there are two ways you can get rich selling things to people:

One, you can play the numbers game - Sell a gazillion small things for a few cents profit

Think: Gas stations, grocery stores, and, on a good day, Amazon.

Sure, you'll probably lose money at first, but sell a few more and now you have the power

Or, you can sell a few really expensive things.

Ever wondered why your town has like three mattress stores for every one person?

They're always empty and yet somehow still keep the lights on.

Well, that's because a few feet of foam doesn't cost thousands, or even hundreds,

50, 60, 90 percent of a mattress is pure, king-sized profit.

It only takes a few sales a month to stay in business.

But a few companies, the really, really successful ones, manage to do both.

If you can make hundreds of dollars on each item, sell it thousands of times an hour,

and convince those same people to buy again in 12 months, AND make us want to line up

with a smile on our face for the privilege of doing it, well, now you have a $265 billion

The iPhone is, arguably, the most successful subscription service in history.

You can bet Apple will announce a new model, or three, every September, like clockwork,

just as surely as you know they'll name it something weird.

The problem is, technology is getting really good.

So good that a lot of people are thinking “Why do I need a new one?”

Some of us care about Portrait Mode and dual optical image stabilization, but, for most

people, checking Twitter and using WeChat is the same on the Phone XS as the X, and

You're invited to the blue bubble club regardless.

According to analysts, the average person waited three years to upgrade their smartphone

Of course, phones are a little bit weird in this respect because so are humans.

The iPhone isn't just a tool, it's a status symbol.

According to researchers at the University of Chicago, the best predictors of wealth

in 1992 were: owning an automatic dishwasher, a fireplace, and oooh, a garage door opener.

Today, it's owning a passport, an iPhone, and iPad, which have a 70% chance of correctly

Owning the newest model signals you have a grand of disposable income to spend every

Add some AirPods and you won't even hear the sound of the money leaving your bank account.

But that only works if this year's iPhone looks different from last, and Apple only

really changes its design every other year.

People are losing their appetite for frequent upgrades, but Apple certainly hasn't lost

Selling half as many phones isn't such a problem if they're all twice as expensive.

The cheaper iPhone has slowly crept from $649, to 699, to 749, today.

The more expensive XS now starts at nine ninety-nine and goes all the way up to $1,449.

Of course, that's only if you're lucky enough to live in the U.S.

To make sense of this, we need to answer the question: How expensive is the iPhone, really?

There's plenty of back-and-forth on whether the iPhone is, quote, worth it, but what isn't

really debated is that, in general, it's higher-priced than most other smartphones

Being selective about which price segments it sells to is pretty much written in Apple's

There's no $300 MacBook not because it's impossible but because that's just not what

And with prices going up even higher, it would seem that's never been more true.

But sticker price isn't the best way to measure actual cost.

Unless you pull a Black Mirror, they're still worth something in a year or two.

The price of something like a house accounts for how much it's expected to gain or lose

Usually, the structure itself depreciates - styles change and wood rots, but the land

Which, side note, is why tiny houses aren't investments.

The land they sit on is often leased, not owned, and therefore, it only loses value.

Basically, you've just bought a house-shaped RV!

Anyway, unless your phone was signed by the ghost of Steve Jobs himself, it's more like