Virtual teardown puts Apple’s iPhone 3G margin at 56%
Even though none of the teardown shops has yet to get its hands on one of the new iPhones, we now have two estimates of how much the 8GB model costs Apple to build.
The first, from Austin-based Portelligent, put the Bill of Materials alone at $100. (see here)
The second, issued Tuesday by iSuppli in El Segundo, CA, is more detailed and probably more accurate. As shown in the chart below, iSuppli came up with a BOM of $126.84 before $9 in manufacturing costs and $37.16 in unspecified “other costs” brought the total to $173. (link)
[E-mail subscribers click here to see the chart.]
Also not included in iSuppli’s $173 total are an estimated $45 in royalties that Apple must pay to Qualcomm (QCOM) and others (see here) and fees due Hon Hai (Foxconn), Apple’s Taiwanese manufacturing partner.
Still, Apple has managed to build the second-generation iPhone for 23% less than the first one, by iSuppli’s calculation, while selling it to the carriers for roughly the same price.
iSuppli estimates that Apple (AAPL) is collecting $499 per phone from the carriers ($199 sale price plus a $300 subsidy), for an effective margin of 56%. Other estimates put the subsidy in the $325 to $350 range, which would push the markup even higher.
Below the fold: Commercial Times’ best guess of who is supplying the parts listed above, as translated by DigiTimes.
Apple is only selling the iPhone with AT&T, because AT&T gives higher subsities and incentives to Apple in order to be the exclusive Carrier of the iPhone. This might change in the future when other carriers will pay Apple just as much as AT&T.
I believe Aaron’s statement is what they call “SARCASM”!!
Windfall Taxes? Stupidest thing I’ve ever read, sorry!
You wouldn’t even be considered an intelligent communist with a statement like that….
Windfall profit taxes are the most absurd thing I have ever heard of, ESPECIALLY in this situation. Why should a company that makes products and innovates as well as Apple be essentially penalized for creating a stellar product that everyone would love to get their hands on?! The nature of capitalism is the incentive to innovate and create good products to achieve success like this, and now you want to penalize them?! Do you not want companies to have the incentive to continue producing amazing products like this? You really need to step back and reconsider that statement. Let the people who make the product keep the profits. Who are you to call on taxing away the profits from them so that you can benefit instead of those who worked so hard to create it?
only 56%?
Jewelry and furniture bring about a 300% markup in price to the consumer.
I’d say it is a down right bargain to make AT&T pay the majority of the cost on the back end and save the consumer up front money. Nice way to not let us “see” what it is costing us unless you look long-term which most people don’t do financially very well. I still think Apply has one heck of a good product here, even revolutionary which has put pressure on others to step up their product development.
56% profit!?!
Someone needs to hit “Big Apple” with a windfall profits tax. How greedy can they be? I think a profit margin around 7% is a reasonable amount.
Is the “Display” and “Improved Touch Screen” distinct and separate parts? I had assumed that they are the same device. Perhaps one is sandwiched over the other?
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
i don’t think it was sarcasm. I think he really is that stupid.