iPhone may pay Apple over 50 percent margins: iSuppli

The iPhone may pay off handsomely for Apple with over 50 percent gross margins for each version of the music-enabled smart phone, iSuppli said

The Apple iPhone announced earlier this month should pay off handsomely for the company with over 50 percent gross margins for each version of the music-enabled smart phone, according to market researcher iSuppli.

Users don't have to worry too much, however, because iSuppli believes Apple will have to reduce iPhone prices to compete against other handset makers.

The gross margin, or the markup over the cost of making the device, on the 4G byte version of the iPhone will be nearly 51 percent, iSuppli said Thursday. The handset is expected to retail for US$499, but the cost of components and assembly are less than half that price, just US$229.85.

The premium version of the iPhone, the one that holds 8G bytes of music, photos and other data, will be even more profitable. It will cost about US$264.85 to make, but sell in stores for US$599, for a 53.1 percent gross margin, iSuppli said.

Over time, Apple will be able to increase its profits, or lower the price tag, as it ramps up production of the iPhone, iSuppli said. In general, once sales of a hot new product start rising, a company such as Apple will increase orders, and component suppliers will reduce their price-per-part to win those larger orders.

It's important to note that iSuppli did not actually have an iPhone to tear apart for its cost analysis. The price and profit figures are estimates based on the features Apple has announced for the handset. "iSuppli has a high degree of confidence in its conclusions," it said in the report.

Apple could not be reached for comment on the iSuppli report.

The price tag on the iPhone may have to come down to attract users anyway, iSuppli said, because it will be competing with 835 other music phone models expected to be launched this year.

There are already 14 music-enabled mobile phones with features similar to the Apple iPhone shipping from companies including Nokia, Motorola and Samsung Electronics, the market researcher said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Dan Nystedt

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?