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
6/25/2009 1:06:32 PM
Also did you think about the cost of the OS? Least it's their own brand, but you're paying for that too, and that's not in manufactured costs.
Least it's not the cost of Windows 7:
These stupid articles (and the people who write them) are retarded when they don't think of all the extra costs that go into something like this. iSuppli can't cover everything. All 100+ blogs that have reported this are wrong with their claims of over $400 profit on the iPhone...
"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay
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
Google's Proposals for Search Antitrust Settlement Shot Down by European Commission
December 20, 2013, 8:52 PM
E-Cigarettes Included in NYC's Smoking Ban
December 20, 2013, 4:00 PM
BlackBerry Partners with Foxconn for BB10 Devices
December 20, 2013, 10:43 AM
3D Systems Acquires Xerox’s Solid Ink Teams in Oregon
December 18, 2013, 7:54 PM
While FCC Debates Allowing In-flight Voice Calls, Delta is Already Saying “Nope”
December 18, 2013, 12:11 PM
New Mac Pro Launches Tomorrow, Starts at $2,999
December 18, 2013, 10:56 AM
Most Popular Articles
China's Moon Rover Lands Safe and Sound, Starts Snapping Pics
December 16, 2013, 1:22 PM
Top Microsoft Graphics Genius Defects to Google
December 17, 2013, 4:27 PM
Report: Fusion Fail? Softbank Wants to Merge Sprint and T-Mobile
December 15, 2013, 6:12 PM
NSA Debates Granting Snowden Amnesty if He Keeps His Mouth Shut
December 16, 2013, 1:17 PM
Harvard Undergrad Busted by Wi-Fi after Making Bomb Threat to Avoid Finals
December 18, 2013, 10:37 AM
Latest Blog Posts
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
AT&T Explores $100B+ USD Deal to Acquire Vodafone's European Operations
Nov 4, 2013, 7:34 AM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information