Sure, LG’s KE850 Prada handset will set users back a cool $778, and the Google Switch just might pop in to make things a bit more interesting, but a recent research report has unveiled that Apple’s sure-to-be-sold-out iPhone is a lean, mean, profit-generating machine nonetheless. While Apple’s well-known for selling its iPods (and to a lesser extent, its Macs) for much, much more than it cost to manufacture, even we’re a bit taken aback at how hard those corporate buyers must be workin’ those suppliers on this one. According to iSuppli (no affiliation with Apple, of course), the 4GB iPhone will yield a “49.3 percent profit margin on each unit sold at the $499 retail price,” while the 8GB rendition will kick back a 46.9-percent margin. You heard right, they’re supposing the $499 mobile only costs Apple $245.83 to produce, while the 8GB flavor demands just $264.85.
I see this being as popular as the Zune, maybe if they can market it well i dont know, i think you will see people using their 500 dollars carfully especially when they can get all kinds of other things they want like ps3 or the wii or somehting.
This is why I will not be caught dead with an Apple product. I refused to that much extra just to look “cool”. Besides, I would rather buy the OpenMoko phone which will be available this quarter from FIC.
Wait and compare…
Wait for someone ELSE to try the thing out first…
Its a stupid cellphone with a MP3 player….SO WHAT…
Jobs doesn’t care what most geeks think, it isn’t for the geek, it’s for the 1% of the cell phone market he’s going after. Every college student will be begging mom and dad for one of these so they can have the “IN” gadget! I predict he won’t be able to make enough of these iPhones to keep up with demand?
I work for a company making semiconductor chips, and we’re shooting for those kinds of margins.
Intel gets downgraded if it doesn’t maintain those kinds of margins.
We’re talking Apple, not Walmart.
They want to sell millions of them, and they only cost Apple ~$245 each to produce??? And they better have enough inventory at roll-out, so they don’t “pull a Sony”???
Re: Intel profit margin
http://tinyurl.com/23qva8
Even so, the company forecast its gross margin will be around 49% in the first quarter and be around 50% for all of 2007. By comparison, that figure has ranged from 55% to 62% in better times.
Look at apple’s Gross margins, overall [scroll down to “Profitability Ratios”
http://tinyurl.com/2rlrw3
5-year Gross margin is 28.44% – so some products have to have higher margin than that, to pull the average that high…
They mention “LG’s KE850 Prada handset will set users back a cool $778” but don’t mention the profit margin on those.
I’m more worried about how much Cingular is going to charge for monthly service than how much Apple is going to make for each phone. The upfront price is fine, if its to much, I don’t buy the product.
NEWS FLASH
The Rich Get Richer
But while I am not surprised that a business is trying to turn a healthy pofit, that figure alone isn’t enough info to draw a conclusion. Is that just the bill of materials? Does it include R&D, marketing, shipping and support?
And the $499 is an MSRP – not a wholesale cost… That isn’t what a vendor pays Apple.
I know corporations are run by weasles, but this report is a bit weasly in itself.
#8 Hey, I’m offended.
Isn’t that $499 retail price WITH a 2 year Cingular contract? What will be the NO CONTRACT price?
There’s a mistake with this story.
It’s filed under “General”. It should be filed under “No Shit?”.
This of cousre assumes that their development costs were nil. This looks far and away the best phone on the market. Also, the price one pays for an item has nothing to do with the cost to produce.
Unless someone comes up with something better and cooler (and let’s face it, they’ve had years to do it), I don’t see the price coming down any time soon.
Er.. so? Worse is record stores proffits:
6-8 GBP to order a CD, sell it for 16-20 GBP
That’s a crime…
I predicted this would fail – and the more we learn, the more people are starting to come around to my way of thinkin.
apple needs to stick w/ the ipod/itunes & useless mac’s, cuz this pos mobile device will kill their CURRENT profit margin
#14 – When your prediction turns out to be wrong, will you do the honorable thing and kill yourself… or at least learn to spell?
50% markup isn’t even that bad. Clothing stores (especially places like Live!) markup stuff by more then 100%
Movie tickets? Whats the markup on that? CDs? Games? All of these things are not sold at cost value. Suck it up ladies.
while I have 2 macs and only have an older PIII/600 machine for emergencies, I won’t be buying one of these phones. I love most of Apple’s stuff but until the price comes down, they open up 3rd party apps are available and some “real world” usage reports come in.
The first rule of Apple’s stuff is never buy first generation. Period.
I’d like to see how the screen holds up to pockets with keys and change in them.
I’d like to see how it rebounds from accidental drops.
I’d like to see if bluetooth transfers become available.
I’d like to see how they respond to battery wear and replacement.
how often and what features come in firmware upgrades.
on another note, I’d love for them to make one of these into a house phone!
how great it would be to have my home phone have all these extra features and internet access through the wi-fi.
That would be great. Don’t know why companies don’t make home phones with these options!
I thought it required 2 year commitment. so the real price they are sold at would be the price of the unit that they will hit the street, plus the monies for subsidizing the commitment… about 200 dollars… so add that…
retail of 500 dollars makes it 700 dollars, then throw the 40% margin on the 700 dollars…
Twenty posters, and not one pointed out that the numbers are wrong. The cost is more like $335 dollars. The numbers in the article yield 100% profit margin.
I bet they sell for thousands of dollars on ebay.
wow so OS and UI R&D cost $0? Keeping this thing for secret for 2 years cost $0? Shipping cost $0? Marketing cost $0? There are a lot more cost other than component cost. Beside just from the current pecification in apple.com you can’t tell what kind of cpu does it use, will it has extra memory beside the 4GB or 8GB which act as HD, can u?
23…
BULL…
Sell 10,000 and they covered the costs, and the rest is profit…