An article over at Macworld News describes how margins for the Apple’s much-anticipated iPhone could be as high as over 50% according to market researcher iSuppli.
Though the iPhone is expected to retail for $499, the cost of components and assembly comes in at $229.85 according to iSuppli’s research. The premium version of the phone, which holds eight gigabytes of data and retail for $599, costs about $264.85 to make and carries a 53.1% gross margin according to the same research.
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An article over at Macworld News describes how margins for the Apple’s much-anticipated iPhone could be as high as over 50% according to market researcher iSuppli.
Though the iPhone is expected to retail for $499, the cost of components and assembly come in at $229.85 according to iSuppli’s research. The premium version of the phone, which holds eight gigabytes of data and retail for $599, costs about $264.85 to make and carries a 53.1% gross margin according to the same research.
iSuppli commented that users may not have to worry about the price given that Apple may have to reduce the price of the iPhone to remain competitive (iSuppli mentioned that Apple will be competing against 835 other music phone models expected to be released this year and that there are already 14 other music-enabled phones with features similar to the iPhone). Apple will also be able to increase its profits or lower the iPhone’s price tag as production of the device ramps up. Once orders for units increase, component supplies generally reduce their price rates in order to win contracts for larger orders.
Though iSuppli wasn’t able to actually dissect an iPhone for cost analysis, its figures are based on what Apple has announced for the device. The firm “has a high degree of confidence in its conclusions,” stated the report.
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One reply on “iSuppli Numbers Confirm More Than 50% Margin for Apple iPhone”
First of all, it’s “than” not “then.”
Secondly, I was under the impression that the term “margin” referred to the difference between what a a company charges for a product and what it costs them to produce that product. What iSuppli is talking about is strictly the cost of the hardware elements that make up the phone. It doesn’t include anything else actually required to make the iPhone a product, such as hardware and software engineering, manufacturing/assembly costs, shipping, marketing, whatever. I think it’s rather disingenuous to imply that Apple is charging twice what the iPhone is “worth.” Given that they’ve been working on this project for 2.5 years, they have incredible costs to recoup even before selling the first unit.