The most recent iPhone model features all the latest advances Apple can offer, but it doesn't come cheap. According to Apple's website, the Pro version costs $999, and Pro Max $1,099. However, comparing the price with what it would have cost to manufacture a phone with the same features in 1991, a thousand dollars may seem like a bargain.
American Enterprise Institute (AEI) has been asking that question since 2014: how much would it cost in 1991 to manufacture an iPhone? A 2013 iPhone 5s would have cost $3.56 million to manufacture in 1991. Advancements in the following models would have made them increasingly more expensive to produce in 1991: $12.66 million for the iPhone 7, $28.61 million for the XS model, and $51.62 million for the iPhone 12.
$101 million
It's Apple's latest model that takes the cake. In 1991, iPhone 14 would have cost $101 million to manufacture. The author of the study is Bret Swanson, AEI seniow fellow. He explains it as follows:
The high-end model includes one terabyte of digital storage, which is 63 times more than the original iPhone, launched in 2007, and which alone would have cost around $45 million in 1991. Add in the A16 processor, the 5G modem, including new millimeter wave capabilities of up to 500 megabits per second, an amazing graphics processor, and four cameras totaling 84 megapixels, and you've got a device that would have cost at least $101 million to build in 1991. We're not even adjusting for inflation or including the display, software, sensors, and numerous other components and features. Today, this $100 million marvel sells for around $1,000.
This evolution shows the power of the free market to improve the quality of life at an ever decreasing cost. These improvements are not captured by price indices, because the same statistical categories (televisions, cell phones) include products that vastly improved from those of even five or ten years ago.
