Who Is Getting Rich Off the iPhone?

118 Comments

Graphic courtesy of Column Five Media

118 Comments

Anonymous

its wrong. it doesnt cost apple 170 to manufacture it, much less, u only counted the prices which are for average consumers, im sure they have deals in bundles that make it much much cheaper, 179?thats crazy best computer costs less, id estimate an iphone costs them about $30 to make in mallasia so their profit is much, much higher

Paul

Good information, although I think the numbers underestimate AT&T’s real profit as the presentation only counts incremental data plan revenue ($30/month). Latest figures show that nearly 40% of iPhone customers are new to AT&T and the average monthly bill for iPhone users is about $95. For these “new” customers AT&T is raking in $2280 over the 24 month contract. Sorry, no graphics, but hopefully I got my point across.

mo

At first when i saw the headlines i thought to myself , surely it’s the guys who make apps for the iPhone, i was wrong.

Alex Romo

That might happen in the USA. I hope someone can explain me the same thing but in Mexico where you pay the subsidied price of about 650 dollars for the iPhone and a monthly fee of service of 50 dollars in a two year contract. And Telcel assures the operation with a 300 dollars deposit in advance in cash as guarantee. So you have to pay around a 1000 dollars plus a two year contract of service at 50 dollars a month.

Jimmy

Wow… way to rip off theoatmeal.com…

You guys suck at this format. Please don’t do it again.

Find something better to do troll

many people use this format, not just some stupid gag site that is trying to be like Collegehumor.com

Do some research before you post stupid comments

Actually collegehumor.com ripped off theoatmeal too.

.la dog!

cool explanation of why you chose .la, i’d love to hear about your process of choosing .biz

Aaron Morse

This is neat, but it would be better if it went further. Paint the picture with app sale revenues (both Apple and ISV’s) and accessory sales too, please!

PS

I always new the math behind it ( obviously not the exact math but ball park figures !!) but loved the way you guys have presented data. I wish presentation would have included cost to AT&T for providing data package to customer, median-high-low usage/account etc.

Venkatesh

You forgot to take into account patent royalties paid to companies like qualcomm for 3G technology used in iPhone.

Jonahan

There are no royalties paid to Qualcomm for GSM since it’s an open standard. CDMA (Verizon) has to pay royalties.

CURTIS

Apple uses 3G technology/chips from Infineon and NOT Qualcomm. This is because Qualcomm is a CDMA infrastructure provider and not GSM.

julien caudron

and????
this is the same business model used for all phone brands! Is it bad now because it’s apple? How do you think you can purchase a nokia smartphone at 99$ with a plan when the regular price is 399$ or 499$??
Moreover if you look at data usage, iphone users are using between 3 and 5 times more data than another smartphone users…. Actually AT&T is not making a lot of profit from those plans….
But I need to say: very good graphic presentation, it’s clear and synthetic. It just too focused on the Iphone when all phone are subsidized this way by operators ;-)

gbp

Love the format.

Simply put , Apple is getting money from ATT.

ATT is getting from Customer.

Gareth Coxon - Dot Design

Very interesting, a real insight. I really like the style of the post in general as some have pointed out, it could have been quite dry with just the info in text format and you have gone the extra mile here, good work and food for thought. thanks G.

spandana

does that mean that AT&T’s data product is sold at ($750-$351)/24 = $15.38 per month? and they are making a profit on that price point?

if by “profit at 17th month”, the profit margin is 1-16/24of 33%. 2B profit at 33% margin is 6B in revenue -> they need to have 6B/24/15.38 paid monthly subs (16.25M).

A S

Good experiment, but there is too much variety in sizes and fonts, making this post look immaturely put together!

Oatmeal did it better with “15 Things Worth Knowing About Coffee”: http://theoatmeal.com/comics/coffee .

Notice the consistency of fonts and sizes in Oatmeal’s post, giving it a more professional look.

Unicorn Fan

The iPhone graphic should use dinosaurs ripping each others heads off and poop and pee jokes like oatmeal does too.

Find something better to do troll

immaturely put together? You must be referring to the link you posted.

Unfortunate

Ironically, this beautiful infographic is not viewable on an iPhone. It just looks like a big, white box.

Paul Lopez

The ecosystem and Apple value chain diagram is very useful, thank you. It also shows how technology players work together and for technology investors, this is good to understand.

James G

I agree completely with the others. Very well designed infographic.

I think there may be a minor mistake, however. In the section that depicts Apple disbursing $179 to manufacturers, etc… the direct sale from Apple to the customer without a contract should show $599 instead of $199. If this was the case, I think I’d own an iPhone (or eight).

Chris

Like the graphics, but where is the Apple numbers at the end? Aren’t they getting rich off the iPhone too?

sanitylovr

Aaaaaaagh. Huge moron graphics hurt the brain. Too much screen area, too little content. Also, too chunky, atomic, and powerpointy. Only Iphoners could love this tripe.

eastmanweb

I found the presentation refreshing and–more importantly–engaging.

Anonymous

OMG. At first I didn’t realize they were graphics. Why aren’t they HTML. It could have been done just as easy in HTML.

Oh yeah… MSIE can’t do HTML.

JZ

note that the profit split between AT&T and APPLE is almost 50/50, each getting about $370. Apple also handles the marketing and advertisement cost. Apple could not trust AT&T when it comes to branding and ad. This is a win-win situation for all involved, users are happy, suppliers are happy, AT&T and Apple are happy, This is how innovation works for the economy!

Sebastian Rupley

@amen–thanks, the graphic itself was produced by Column Five Media, which specializes in infographics. They use a variety of graphical tools.

Sebastian

amen

Hey, that graphic really turned out well, do you mind me asking what you used to make it? I presume illustrator but I’m not sure

Nicholas

Don’t forget that the AT&T customer is not able to leave until after the 24 month period, so the revenue is guaranteed in a sense. Additionally, if you are longer terms customer, they are making money on you in terms of retention and acquisition costs. Think about the $99 iPhone 3G. That is likely making more money than the top of the line model.

I doubt that many app developers are making a hell of a lot. It is a business, but selling apps can be unstable with a hefty up front investment. I tend to think that like the web, we’ll see a shift to more business critical application models. This includes publishing models and sales channels. I am getting a lot of interest as of late in the catalog space now that the urgency surrounded Android has subsided a bit. Although I am agnostic, there has been a shift of perception back towards the iPhone as the primary app platform.

YUvamani

Interestingly the early termination penalty is 180 and goes down every month ..

which means an early termination costs AT&T 170 bucks.

So If we all got our iPhones and terminated the contract immediately AT&T is in ….

I am sure they have some deal with Apple to cover that .. no?

Jason Kolb

Very interesting, I had always wondered how they were making money on the iPhone.

Also, love the format of the post. Like reading a magazine.

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