iSuppli: iPhone to generate nearly 50% margin | iLounge News


iSuppli: iPhone to generate nearly 50% margin

Apple and Cingular will see a nearly 50 percent gross margin on each iPhone sold, giving the companies “a hefty profit, as well as plenty of room for future price cuts,” according to a preliminary Bill of Materials (BoM) estimate by iSuppli.

“iSuppli estimates the 4GB version of the Apple iPhone will carry a $229.85 hardware BoM 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 for iSuppli. “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.”

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wow, that is so rediculous.

Posted by kermit on January 18, 2007 at 10:43 AM (CST)


Those numbers don’t take into account the research and development costs.

You don’t just call the factory and order up an iPhone. It took 2.5 years and hundreds of expensive talented people to get this thing off the ground.

Posted by ort on January 18, 2007 at 10:52 AM (CST)


The actual manufacturing of a DVD costs less than 50 cents (or less) yet they sell it for 15-20 bucks…
This does not take into account the budget of the actual movie… The hundreds of engineers and programmers make up the expense…

Posted by chaviro on January 18, 2007 at 11:09 AM (CST)


this proves that as soon as they have made back the money they spent developing the phone prices will drop by about 100 dollars as they did with the ipod

Posted by killa on January 18, 2007 at 11:12 AM (CST)


Every company has an obligation to make money.  Good for them.

Posted by jibjab on January 18, 2007 at 11:42 AM (CST)


Yes this is rediculous—iSupli does not know who makes the screen, the touch interface, the CPU, how many ASICs or whether its a custom SOC, etc.  Plus, talking about cingular making money on the hardware—someone doesn’t know what they are talking about.

Wait until the device comes out, then margins can be calculated.  Until then, its *pure speculation* because *nobody* knows the interior components or full feature set of the device. 

What we do know is a number of the components are unique—the LCD display, and probably the SOC are totally custom.

Posted by Jay on January 18, 2007 at 12:24 PM (CST)


These “we break down component cost so people can bitch and moan about prices while ignoring invisible cost factors” stories rank SECOND only to an-a-lysts word-vomiting about their totally obvious “I read rumorsites” predictions. I am officially sick of it. Nuke ‘em from orbit, I say.

Posted by Bad Beaver on January 18, 2007 at 12:34 PM (CST)


It’s the only way to be sure.

Posted by ort on January 18, 2007 at 12:41 PM (CST)


it’s “RIDICULOUS”. Could people take the time to learn to spell before posting? It only diminishes the strength of your point if you can’t even spell.

Posted by urbanslaughter on January 18, 2007 at 1:19 PM (CST)


I only wish they were making the money from me. The RIDICULOUS thing is the carrier of the service.

Posted by Gary Zero on January 18, 2007 at 1:25 PM (CST)


Anyone who has a semi-functioning brain could easily that the iPhone is Ridiciously Over-Priced…. But of, course…. those die-hard Apple followers would for sure insist otherwise….

Posted by DJ on January 18, 2007 at 1:58 PM (CST)


DJ: “the iPhone is Ridiciously Over-Priced”

Why is it that people with the same point spell “ridiculous” incorrectly? I think that’s RIDICIOUS and REDICULOUS.

Good for Apple. It’s an innovative product and people will pay for it. Get over it. If you don’t like the price, don’t get one. Your whining is REDICIOUS :)

Posted by Brent on January 18, 2007 at 2:40 PM (CST)


Do people miss the fact that the plan to Cingular is also included in that price? The same thing was said about the iPod and yet people are still buying them!!

Posted by AZ on January 18, 2007 at 2:58 PM (CST)


Oh, reminds me, I wanted to buy a new iPod…

Posted by Bad Beaver on January 18, 2007 at 3:11 PM (CST)


Are those margins BEFORE the money that Apple gets from Cingular?

Posted by otaku on January 18, 2007 at 3:55 PM (CST)


ok, sooner or later, people are going to realize that aple is being greedy and price becomes a huge issue over sex appeal.  Right now, peeople are still infatuated.  No company, not even apple can keep it coming quick enough.  Sooner or later, they are going to have to take a profit cut.  They are handing off their lack of mac sales and punishing the consumer with higher profit.  Its not a necessary thing to do, so don’t do it.  In my opinion, zune has won over a loyal ipod buyer.  Im sick of it apple.

Posted by joe on January 18, 2007 at 5:42 PM (CST)


otaku: Apple is not getting any money from cingular. The deal probably was “we’ll bring the phone, you bring the infrastructure” in other words, cingular paid apple by developing all of the network-based services. Cingular is giving you: 1. Visual Voicemail 2. Free Yahoo push e-mail (costs $10 normally) 3. Google search (Would cost extra even on a data plan)

Posted by anti-luddite on January 18, 2007 at 7:37 PM (CST)


Why make a profit? Let’s just sell for cost and make no money, that’s my business plan.

And as for the Zune comment? Come on dude, M$ has been charging through the nose for crap for years.

Posted by Rob on January 18, 2007 at 7:58 PM (CST)


Who told you that? That’s only the cost of the phone. Neither Apple nor Cingular has even mentioned data/voice plan prices yet.

Posted by Nobody on January 18, 2007 at 9:33 PM (CST)


@ Rob: Shhhh! People are quite out of humor lately when it comes to M$ quality/price. Let’s not make their lives more miserable.

Posted by Bad Beaver on January 19, 2007 at 3:28 AM (CST)

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