Apple Makes Over $400 Profit per 16 GB IPhone, $500 per 32 GB Model
June 25, 2009 8:35 AM
comment(s) - last by
Apple earns approximately a $400 profit per 16 GB iPhone 3G S sold, and $500 per 32 GB 3G S sold.
Apple is making a handsome profit on its new phone
Apple has reportedly the world's
strongest brand image
, and yet manages to maintain some of the industry's largest profit margins, a rare achievement. Now that the iPhone bill of materials (BOM) for the iPhone 3G S has been divined thanks to an
iSuppli tear down
, it appears that Apple has another business success story on its hands with the
iPhone 3G S
The hot new phone's components cost $172.46, for the 16 GB model, according to Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. The most expensive component is the 16 GB of NAND flash memory, produced by Toshiba and estimated to cost $24/unit. Least expensive is the audio codec chip, which costs a mere $1.15/unit, produced by Cirrus Logic.
The phone costs approximately $6.50 to assemble, bringing the estimate cost to $178.96/phone.
The 16 GB iPhone 3G S
costs $599.99 for returning customers
with less than a year on their contract, and as little as $199.99 for new customer or returning customers with 2 years on their contract. However, according to reports, Apple sells the iPhones to AT&T at approximately $600 per phone, and the carrier provides the discount. Apple is also rumored to get a small cut of the subscription fees.
States Mr. Rassweiller, "Although the retail price of the 16GB iPhone 3GS is $199, the same as for the 8GB version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions."
At a minimum, before shipping, R&D, etc., it appears Apple is making a whopping $422 profit on every $178 (manufacturing cost) phone sold. That incredible profit margin may be cut into a bit by the aforementioned expenses of transportation, R&D, advertising, and other costs, but likely remains quite impressive at the end of the day. Even better for Apple, it likely enjoys an even larger profit on the $699 32 GB iPhone 3G S, as the only difference is a marginally more expensive (likely $20 or less) NAND chip.
Concludes Mr. Rassweiller, "From a component and design perspective, there's also a great deal of similarity between the 3G and the 3GS. By leveraging this commonality to optimize materials costs, and taking advantage of price erosion in the electronic component marketplace, Apple can provide a higher-performing product with more memory and features at only a slightly higher materials and manufacturing cost."
This article is over a month old, voting and posting comments is disabled
Money makes Money
6/25/2009 12:53:02 PM
Well if Apple makes that kind of profit, quit bitchen, and buy Apple shares. People pay extra for Designer clothes, designer anything. Apple makes a Designer Iphone. Apple labels happen to be a Designer label and you pay more period.
“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs
Apple/IPhone Recap -- 1 Million IPhones Sold, MacBook SATA Caps Removed
June 23, 2009, 8:45 AM
AT&T, Apple Set Guidelines for June 19 iPhone 3G S Launch
June 11, 2009, 1:26 PM
Apple Has Top Brand According to World Consumers
March 31, 2008, 6:45 PM
Retiree Sues Apple For $7,500 for Wiping Honeymoon Photos From His iPhone
November 30, 2015, 10:23 AM
iPhone 7 May Pack 3-4 GB Memory, More Storage; 4-Inch Comeback is Rumored
November 20, 2015, 10:12 PM
OnePlus One, OnePlus 2 Will Receive Android Marshmallow in Q1 2016
November 16, 2015, 9:58 AM
Lenovo Whoa: Motorola Droid MAXX 2 and Turbo 2 Break Cover in Leaks
October 26, 2015, 3:12 PM
Leak: Apple Preps for First Real Android App Foray With New Apple Music App
October 24, 2015, 1:59 PM
Pepsi Smartphone? Empty Calories Coming Soon to the Midrange
October 12, 2015, 11:41 PM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information