Shenzhen, Guangdong -- (SBWIRE) -- 09/22/2016 -- According to the IHS Markit, the cheapest model of Apple's latest iPhone 7 costs $219.80 for the materials inside it, which is a lot less than $649, the price Apple currently sets for its 32GB iPhone 7. With the extra $5 for manufacturing process, it costs Apple in total of $224.80 for the 32GB version iPhone7.

Comparing to its predecessor iPhone 6S, it's costing $36.89 more according to IHS. And now iPhone7's Bill of Materials (BOM) was "in line" with flagship devices made by Samsung. But Apple is still the most profitable company in the smartphone business. Other companies are still not close to even half of how much Apple is getting from the iPhone series.

For the $36.89 up over the 6S, Apple did make improvements on iPhone 7 despite its look which is almost identical with the 6S especially when with a case put on it. Although the improvements are not that easy to find from the exterior, the iPhone 7 is more powerful than the 6S. The screen rendering has been improved over the already top-of-the-class display on 6S with wider color gamut. The haptic engine newly introduced to the iPhone series from the last generation is now more durable and has better dynamic response. And the removal of the 3.5 millimeter headphone jack allows the possibility of larger battery and Taptic Engine.

One important improvement over the previous generation of iPhone is that for the first time Apple updated the base storage capacity of its smartphone series to 32GB. It's taking a big leap by making the shift from 16GB/64GB/128GB to 32GB/128GB/256GB. It's an important change because the gap between two models of different storage capacity has a great impact on Apple's profit.

"All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past," said Andrew Rassweiler, senior director of cost benchmarking services at IHS Markit.

The 16GB model was used by Apple to lower the bars for people who want to buy an iPhone without spending so much money on it. But it can sometimes put users into an awkward situation when it comes to usage scenarios like data transferring, video shooting, etc. For the sake of user experience, most people would go for the 64GB version of the iPhone 6S which is priced significantly higher than the 16GB model. But for the iPhone7, people might have to think this through before they make the decision. It's not clear if the money that Apple spend on this storage update is going to pay for itself.

About Henry Peng
Henry Peng is a full time document editor working for Leawo Software, a company that provides services like multimedia solutions and Apple related utilities. He specializes in writing documents about video solutions and tips for video converting, Blu-ray, DVD converting, YouTube video downloading, etc.