Apple's 50 per cent profit margin on iPhone
By Simon Aughton,
Apple will enjoy a 50 per cent profit margin on each iPhone sold, according to a breakdown of the handset's component costs by research phone iSuppli.
The figure is drawn from analysis of the capacity and features of the phone-iPod hybrid, combined with information from Apple about the materials used plus company sources and third-party publications. iSuppli says that although the figures are preliminary until it gets hands on a physical unit, it has a 'high degree of confidence' in its findings.
'iSuppli estimates the 4GB version of the Apple iPhone will carry a $229.85 hardware BoM [bill of materials] and manufacturing cost and a $245.83 total expense, yielding a 49.3 percent margin on each unit sold at the $499 retail price,' said Andrew Rassweiler, teardown services manager and senior analyst. 'Meanwhile, the 8GB Apple iPhone will sport a $264.85 hardware cost and a $280.83 total expense, amounting to a 46.9 percent margin at the $599 retail price.'
Such margins are not unusual for Apple, according to Jagdish Rebello, director and principal analyst at iSuppli, with margins of 45 per cent and more in several other products including the iMac and iPod nano. And such high margins give Apple plenty of scope for price cuts in the face of what is expected to be extensive competition.
"With a 50 per cent gross margin, Apple is setting itself up for aggressive price declines going forward," Rebello said.
iSuppli estimates that some 835 new mobile phone models are expected to be introduced in 2007, including 14 music-enabled handsets with features that compete closely with the iPhone that are already shipping from manufacturers including Nokia, Motorola, Samsung and LG.
Tina Teng, analyst, wireless communications, for iSuppli said that she expects phone manufacturers (OEMs) such as these to introduce models designed specifically to compete with the Apple iPhone.
"The most successful OEMs will be those already established in the mobile-phone business, that support all file formats and that have excellent sound quality," Teng said.
To succeed these must have excellent supply-chain relationships with suppliers of the kind of touch screen used in the Apple iPhone, Teng added.
Sponsored results
Apple Apple iPhone 8GB black on O2 iPhone 45, wit
Phone features include: camera, MP3 player, 3G video calling, smartphone technology (allowing you to
the carphone warehouse
advertisement
Latest Internet Features
Blogging for business
Enterprise blogging has survived the fad stage. Managed properly, it can be a communication hub as well as being a revenue generator and money saver.
- Social networking in business and branding
- Internet search secrets
- Big IT for CERN's particle smashing experiment
- The saga of Scrabulous
- Q&A: Motorola's enterprise VP John Coon
- IT around the world: Russia
- Q&A: Orange's devices chief Francois Mahieu
- Q&A: Plusnet's Neil Armstrong
- Chinese web control an Olympic challenge for tech firms
Latest Internet Reviews
Fortinet FortiGate-3810A
Rating: ![]()
advertisement
Latest News Videos in Internet
Video: Q&A with Easynet Connect's Chris Stening
IT PRO spoke to Chris Stening, managing director of Easynet’s SME division, about whether ISPs are giving businesses the service they deserve.
White papers
Want more background on today's hottest IT trends?
Visit IT PRO's white paper library for more on virtualisation, encryption and other topics.
Register for IT PRO
You'll get exclusive member benefits including free white papers, downloads, Webinars and weekly newsletters full of the latest IT PRO news, reviews, insight and expertise.
Sponsored results
- Apple Apple iPhone 8GB black on O2 iPhone 45, wit
Phone features include: camera, MP3 player, 3G video calling, smartphone technology (allowing you to
the carphone warehouse



Social Bookmark this article: What is this?