Apple’s 4GB iPhone costs $200 in components to make. The 8GB model’s parts total just $20 more. So claims US market watcher and device stripper-down Portelligent.
Of course, Portelligent’s numbers – relayed by BusinessWeek – only cover the parts, not the cost off putting them together, shipping the finished product, marketing and, crucially, the cost of the software that makes the iPhone sing.
But it shows Apple is in a good position to make money on the device. Whether you accept the more conservative sales estimates or the most bullish figures, there’s no doubt Apple has sold a fair few iPhones since the device went on sale almost a week ago.
Clearly, the high price of the handset is not putting buyers off to the extent that some observers anticipated it would.
Geeks judging the consumer market… First, I do NOT own an iPhone, nor do I intend to own one anytime soon, nor do I own any Apple stock. I have owned probably one of every category (PDA, smartphone, analog, digital, etc.) of cell phone over the past 15 years though.
I know as many middle-aged, non-technical people that own one as I do 20-somethings who view it as a status symbol. I have spent 10 minutes with an iPhone and it is far away the most intuitive, easy to use smartphone/combo device ever to come to market. Now for the mac/Jobs/Apple haters, if possible, drop your bias for a minute and actually check one out. I am not suggesting you buy one, believe in the Apple Temple, or anything like that, but it really is a slick, easy to use, multi-function device.
Also, I am in no way defending any of the shortcomings discussed, such as user replaceable battery, crappy AT&T, etc. Just commenting that it does live up to a lot of the marketing statements.
28 – It’s “profit margin” which is defined as profit as a percentage of sales. Open an accounting book before you speak. Let’s do the math:
$500 sales price – $200 cost = $300 profit
$300 is 60% of the sales price–which is the “profit margin”. You cannot have a “profit margin” greater than 100%. Again, learn the terms. Yes, they might be making 2x the cost of the product, but the term “profit margin” is what is being discussed.
#13
There’s a company here that sells dual core machines for about $250. DVD burner included.
Open a Mac what do you see? THE SAME PROCESSOR, THE SAME RAM, THE SAME HDD AND THE SAME INTEGRATED VIDEO.
Sounds like IBM profits in the pre IBM PC / entry of PC clone days.
The more things change the more they stay the same.
Imagine if IBM had not introduced PC Clones or used off the shelf pc hardware ( Intel, Maxtor , Seagate etc etc)
We would be paying $ 15,000 for a $ 500 personal computer.
Imagine what laptop computers would go for ?
Interesting that there not one authentic analyst out there who puts the iPhone profit before taxes and development costs at more than 55%.
Wow…
You guys are arguing about a phone.
Fortunately, I have a phone already and when I push the numbers, it rings and people I want to call answer their phone and we talk. That’s ALL a phone is for.
I ordered mine last week, but haven’t gotten shipoing notice yet. Damn. I already got the crystal jacket set I ordered for it, and now seeing it empty is beginning to piss me off.
I’ve been a portable computing fanboy since before the Atari Portfolio and I’m looking forward to seeing how well the iPhone has implemented all of its multiple technologies. The user interface has always been Job’s forte, but the iPhone has a great many hurdles to clear before it can claim the trophy of ultimate pocket computing device.
No matter what any of us believe the market will eventually demonstrate that Jobs has done it again and changed the nature of personal electronics.
OFTLO. sssh! Do you want to start a war? It’s not just a phone… it’s an “i” phone. Don’t degrade anything with an “i” prefix or you’ll have to start looking over your shoulder. Read the iBble and be enlightened.
“I’ll happily get there thanks to my gps enabled pocketpc phone.”
Pedro, you don’t know where your pocket is?…
Alone. Because no one in his or her right mind would want to be bothered with Pedro.
Why do people keep making the 60 percent profit claim knowing that is only the price of components? Seems to defy common sense.
…hey what’s wrong with apple making a killing. I remember the day when the powers that be wanted to squash Apple. I’ve been a mac user since 1990. I’d like to have an iPhone but I cannot justify it. Rock On APPLE inc, rodya
I recently bought a Samsung Blackjack because it does 2 things the iphone does not.
It is on the 3G network, and it does Microsoft Direct Push for my work email. The only thing it does not have that I kinda wanted was GPS. But hell, I only paid 75 bux.
Keep yer 600 over priced piece of Steve Jobs retirment plan. The cool features in the iphone will be widely available in 13 months when it is time to upgrade my Blackjack. I’ve already seen videos of chinese iphone clones.
Don
#49
It’s the same with truffle mushrooms; they’re shaped like turds, they smell like pussy and they taste like dirt; but because it costs $100 (minimun) a pound everyone wants to have it.
#49,
“The cool features in the iphone will be widely available in 13 months when it is time to upgrade my Blackjack. I’ve already seen videos of chinese iphone clones.”
Yes, right. Just like the iPod and all its “clones”. Not only that, who the hell does it benefit to buy knock-off shit anyway? you don’t like to payy engineers for their creativity? You don’t like to keep creative jobs in this country?
Apple has proven over and over (and over) again to all detractors that people will pay top dollar for devices that provide them with an easy solution to their needs.
On top of all that, any copy released at the end of the year will be a first-gen device against Apple’s second-gen products. Again, look at the iPod. Jobs is trembling in his boots. Right.
25-
Uhm, I don’t own an iPhone, and openly mock the mindless flocks who have bought it.
I’m simply saying any company has a right to make as much profit on anything they want. Complaining that it’s ‘too profitable’ (like those who whine about oil companies’ record profits) should be lobotomized.
So, JimR, perhaps next time you’ll actually know what someone’s talking about next time you post.
Just get over it guys. Apple is and will allway be the best and most reliable electronic producent in the freaky world thats it.!! Face it communists and player haters.
Sometimes a geek likes to tinker with gadgets. Apple’s closed proprietary systems can be a bit of a drag to program. On the other hand, something like Openmoko’s NEO 1973 phone is really exciting.
JimR, analysts say only 60% profit, because they are using accounting definitions of profit. This is profit as a percentage of sales, not as a percent of cost. You buy something for a penny, and sell it for $10, you’re making 99.9% profit.
MikeN, I wouldn’t quit your day job. First of all, your $10 scenario results in 1000% profit, not 100%. Secondly. Apple isn’t a retailer as you described. The didn’t buy an iPhone and resell it, they m-a-n-u-f-a-c-t-u-r-e-d it. The “cost” of an item is more than the sum of it’s parts. Also you should look up gross profit as opposed to net profit. Also, try looking at Apples financials. Their net income for the last qtr was 14.6% of sales and 41% of their gross margin. That alone should give you an idea of what their business model produces.
In other words Nike, you don’t know what you are talking about. i have 25 years experience investing to qualify that sentiment.
I think the actual research took to implement the GUI For the iphone would be enormous,
Have you seen the functions on it? Takes millions of manpower to create something so easy to use.