Blog Post

Who Is Getting Rich Off the iPhone?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Graphic courtesy of Column Five Media


118 Responses to “Who Is Getting Rich Off the iPhone?”

  1. 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

  2. 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.

  3. 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.

  4. 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.

  5. 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 ;-)

  6. 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).

  7. 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).

  8. 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!

  9. 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.

    • 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?