This is buzzing around today: Apple’s iPhone is expected to generate around a 50 per cent gross margin, according to research firm iSuppli. Apple execs were asked about the margins on the earnings conference call yesterday, but they refused to comment.
The firm estimates 4GB version will carry a $229.85 hardware bill of materials and manufacturing cost, at a $245.83 total expense, a 49.3 percent margin on each sold at retail price of $499. The 8GB iPhone is expected to sport a $264.85 hardware cost and a $280.83 total expense, amounting to a 46.9 per cent margin at the $599 retail price.
In fact, the margin could be even higher than this, says this Telecoms.com story. The retail price is believed to include a subsidy from Cingular.
The margin range is is similar to what Apple has changed for Nano and iMacs as well, the firm says. On other high-end phones, the margins are about 20 percent, says the firm.
AP: But other Wall Street analysts’ estimates for iPhone margins are more conservative. Shannon Cross, an analyst at Cross Research, said in a note to clients she expects Apple to have a gross margin on the iPhone of about 22 percent.
Why all this fuss on margins? Well, from consumer perspective, this means that it gives Apple plenty of room to cut prices as component costs fall or to stimulate demand.