Apple's iPhone could turn out to be one of its best profit makers

Apple was laughing all the way to the bank during Q4 2006 when it enjoyed brisk holiday sales. The company saw its profits jump 78 percent from Q4 2005 and saw its iPod shipments grow 50 percent to 21 million. iPod sales alone accounted for $3.43 billion of Apple's $6.42 billion revenue for the quarter.

Apple may have an even better Q3 and Q4 once its iPhone is released in June of this year. According to iSuppli Corp., Apple will maintain nearly a 50 percent gross margin with the iPhone according to Bill of Materials (BoM) estimates.

The 4GB iPhone, which will retail for $499 with a 2-year contract, has estimated hardware and manufacturing costs of $245.83. The $599 8GB iPhone (with 2-year contract) has estimated manufacturing and hardware costs of $280.83. This results in gross margins of $49.3% and 46.9% respectively.

"With a 50 percent gross margin, Apple is setting itself up for aggressive price declines going forward," said Jagdish Rebello of iSuppli.

iSuppli notes that these figures are preliminary and that it may revise the estimates once a physical teardown of the actual devices are performed. The company does note, however, that gross margins in excess of 45% have been documented in the past for other Apple products including the iMac and iPod Nano.

"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes

Most Popular Articles

Copyright 2018 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki