Not only was it more expensive, but the difference between the bill of materials and the retail cost was much greater. Narrator: Something changed when Apple released the iPhone 10. As a comparison point, the Galaxy S10 Plus is about $420 below materials for a price of $999. Sawhney: The bill of materials is about $490 for a phone that is priced at $1,099.
Narrator: And those components cost a lot less than a new iPhone. For example, Sony competes with Apple in smartphones, but all of the camera sensors that go into an iPhone are made by Sony. Sawhney: The components that go into making a smartphone are fairly standardized. Narrator: And iPhones have added great features, like OLED displays, faster processors, and thin bezels, but competing products have many of the same features. But are these products worth the premium? Apple loves to talk about its innovation. Apple has kept its proprietary lightning connector while removing useful ports, like the headphone jack and the SD card reader, forcing consumers to buy expensive dongles like its $39 SD-card-to-USB-C reader. And Apple's accessories also have high premiums compared to non-Apple products. If you want a 13-inch MacBook Pro with 512 GB of storage, you have to pay $400 more than the base model. Narrator: With Apple's computers, these upgrades get even more expensive. So if you want more memory, you have to pay more Apple tax. Sawhney: Apple does something else that's a bit sneaky, which is that when you're buying the iPhone, you can't add memory to it. Apple had botched the messaging, and its $1,000 stand became infamous. Narrator: In truth, $6,000 for a professional reference monitor of this quality is comparable to the competition, but that didn't matter.
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