Apple iProfits Revealed

Dennis Faas's picture

The new iPhone 3G has made headlines with a price $100 lower than the original 8GB model. A recent study by hardware analysts iSuppli estimates that the manufacturing cost for each phone is $173.00 (the original cost $280.82). Thus, the company makes a $26.00 profit on each handset.

iSuppli offers two reasons why the profit margin is high, and why the price of the device has dropped by one third. First, mobile phone providers have always lost money on delivering handsets, but made them up via subscriber fees. The analyst firm ballparks Apple will get about $300 per unit from wireless providers. The second fact is the dropping cost of parts for the iPhones.

It is estimated that the new 3G's materials make it 62% cheaper to build. The director and principle analyst for iSupply states: "The new iPhone is significantly less expensive to produce than the first-generation product, despite major improvements in the product's functionality and unique usability, due to the addition of 3G communications."

Although the display price hasn't changed much, components such as NAND flash memory have almost halved in price. (Source:

The new phone will cost consumers $199 for the 8G and $299 for the 16G with a 2 year plan (AT&T). The plans which accompany the contract are the Unlimited iPhone 3G data plans at $30 a month (in addition to which voice plans starting at $39.99 a month need to be purchased). Unlimited 3G data plans for business users will be available for $45 a month, in addition to a voice plan. (Source:

Any way you slice it, Apple is making a killing.

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