1 Comment

Summary:

Revealed in court documents related to next week’s Samsung trial: the gross margins Apple Turns out Apple makes at least twice as much from each iPhone as it does from the iPad.

iPhone 4S

Thanks to its upcoming courtroom showdown with Samsung, we get an unusual peek into Apple’s finances. Documents unsealed for next week’s trial detail the gross margins for Apple’s two most important products, the iPhone and iPad. It turns out that Apple’s iPhone margins, or the difference between selling price and cost, are nearly double that of the iPad.

According to the Reuters report:

  • Apple recorded $33 billion in revenue from iPhones between April 2010 and March 2012.
  • Its gross margins on the iPhone during that time period ranged between 49 and 58 percent.
  • From October 2010 through March 2012, Apple generated $13 billion in iPad revenue.
  • iPad margins were generally between 23 and 32 percent.

Apple doesn’t publicly break down its gross margins by product, which is why a peek like this is so tantalizing to customers, investors and competitors. These numbers help illustrate why investors care so much more about how many iPhones Apple sells — even though the price of the most expensive iPad is slightly more than the most expensive iPhone (unsubsidized).

These gross margins don’t translate to pure profit, since they don’t account for some other related costs, such as marketing and support. But, they do show that Apple has better maximized the difference between how much it pays to build an iPhone versus how much it can sell it for compared with the iPad — but, to be fair, Apple has been selling its smartphone for two and a half years longer than its tablet. Still, these numbers reinforce that the iPhone remains the company’s mobile profit center and is far more important to its bottom line.

  1. this is the surcharge everyone pays for having a subsidy model for cell phone purchases.

    get rid of subsidies/long term contracts and this extra margin will disappear overnight making phones much more affordable when looked at over the long term.

    Share

Comments have been disabled for this post