IPhone X Sets 'Aspirational' Starting Price for New Premium Smartphones, Says IHS

The iPhone X appears to set an "aspirational starting price" for "an even more premium class of smartphones," said IHS Market analyst Wayne Lam in a teardown report. That differs from Apple's previous staggered pricing strategy between models that gave consumers a "tradeoff" between larger and smaller displays and standard and high-density storage, Lam said. The 64 GB iPhone X has a bill of materials (BOM) of $370.25, $50 more than the previously most expensive iPhone and nearly $70 more than the $720 64 GB Samsung Galaxy S8's BOM of $302, said the report. Based on the BOM and retail pricing, IHS Markit believes Apple is maintaining its typical hardware margins for the iPhone X and that gross margin "may increase over time as manufacturing yields improve." The iPhone X has catapulted the industry to a new price point, but its underlying architecture is analogous to the iPhone 8 Plus, said analyst Andrew Rassweiler. The X's "superior screen" and TrueDepth sensing set the phone apart and contribute to its higher cost, Rassweiler said. The standout feature on the iPhone X is the Face ID facial recognition system that replaces Touch ID for unlocking the phone and authenticating payments, said IHS. TrueDepth is also behind studio-quality lighting in the camera's portrait mode and augmented reality experiences in games and apps. It's housed in the black notch at the top of the phone and has an IR camera that projects and analyzes more than 30,000 invisible dots to create a precise depth map of the human face, using machine learning to adapt to physical changes in appearance, IHS said. Suppliers contributing to the Face ID assembly are Sony and Foxconn (IR cameras); STMicroelectronics (an application-specific integrated circuit and photon avalanche diode detector); Texas Instruments (IR emitter); and Finisar and Philips (dot projector). IHS pegs the BOM for the TrueDepth sensor at $16.70. Apple didn't respond.