Teardown analysis estimates nice margins on the iPhone
A teardown analysis of Apple's iPhone estimates that the company is making about $333 on each sale of a 8GB iPhone.
Market research firm iSuppli (watch them get sued for violating Apple's iTrademarks) put out one of their patented teardown analyses Tuesday. They estimated that Apple paid a total of $265.83 in hardware costs to build each 8GB iPhone, not including royalties or logistics expenses such as distribution, the report said.
Apple's making a healthy margin on each iPhone, according to iSuppli's estimates.
(Credit: Corrine Schulze/CNET Networks)The report confirms a few things we already knew, such as Apple's decision to use an ARM chip inside the iPhone. Samsung is the big winner among the component suppliers, contributing the ARM processor as well as flash memory and RAM inside the iPhone. Apple and Samsung are already close partners on iPod development, so perhaps that's not a huge surprise.
Two companies, Balda and TPK Solutions, collaborated to build the display module that's been such a big part of the iPhone's appeal. The touch-screen itself comes from either Epson, Sharp, or Toshiba Matsushita Display Technology, according to iSuppli. UPDATED: iSuppli issued a correction to this section late Friday, now saying they "believe" Balda and TPK are the display module suppliers. And it's Epson Imaging Devices Corp., which is different from the printer company.
The bill-of-materials estimate isn't foolproof, but it does give us some idea of how Apple is assembling the iPhone. If the profit margins are accurate, and Apple sold about 500,000 iPhones over the weekend (most of which were the 8GB model), that means the company made over $160 million on iPhone weekend. Apple's third-quarter ended on Saturday, which means we might get a true picture of the first weekend's iPhone sales when Apple reports earnings later this month.
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
while they're squinting and fumbling to do something exotic (like read their email text) they'll understand why no other manufacturer ever
tried to shrink a laptop down to the size of a bar of soap. The iphone. It does everything, yet it does nothing well. Sounds like Inspector Clouseau. Just think. For the same money you could have bought a real laptop computer that can do real things. Like browsing the internet, playing music with actual fidelity, and playing video on a screen designed for humans. Or even making a phone call.
On top of the effedctive marketing, it is a sweet music player (probably the best iPod or MP3 player ever), great e-mail, pretty darn good browser, and a very good phone. Yes, I have one, but that doesn't mean I'm a fanboy. There are some shortcomings- for example, it has poor security to protect data on the phone if it gets lost or stolen. And of course I'm sure nobody is happy about only being able to use the supplied ring tones - no songs or even purchased music ringtones.
But contrary to your un-informed rant- you obviously don't have one and you probably haven't even touched one, it does many things very well. And I can carry it much more easily than I might carry a laptop, which is the whole idea.
other piece of new technology introduced over the last 20 years
you'd see the same type of inflated expectations and ridiculous
pricing. It's not about Apple or Steve Jobs...just like it was never
about Microsoft or Bill Gates (I'm positive you own a PC)...it's
about the insatiable appetite of our consumer culture and the
value people place on having the next best thing to add to the
ever-growing mountain of stuff. For some people it's just may
be a neat new toy to play with. For others it may be a status
symbol or an attention getting device. Whatever the
reason...that's their business. Why not let them enjoy the
moment? Why do you feel the need to tear them down? You
stereotype the buyers as the "Apple Faithful". Like it's some sort
of cult that likes Apple. But I'm sure many PC folks were among
the first buyers. Search your feelings and the reasons for your
post. If it's anything more than the same passion and reasoning
a Chevy guy has for hating Ford (or vice versa) I'd be very
surprised.
new. How other phones already have the features. So if there are
competing products, with similar feature sets, then there is no
monopoly. Further more Apple isn't keeping anyone from
developing and selling an "iPhone killer."
devices) is similar to PDA's - mobile device (SMALL) with features
that can be found in laptops and desktops. I think the concept is
what many users are looking for - including I, if it works!
that at launch can be considered a fixed cost. Usually this makes
the cost of the first one millions of dollars. The more they sell, the
lower the fraction of the fixed cost is included in that marginal
Unit. I wouldn't doubt if that 10,000,000 goal is their break even
point. After that many are sold, the can probably start to bring
down the cost. It's the same with any new technology or
technology product.
- Apple doesn't make that much money on each iPhone.
- by Sygonus July 4, 2007 12:31 PM PDT
- Seems like neither iSuppli or CNET understands the concept of full costing. A bill-of-materials is just that... only measures the materials used.
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(14 Comments)Direct labour + allocated overhead will take a significant chunk out of the estimate provided by iSuppli.
Simply put, Apple definitely isn't reporting $333 of profit for each iPhone sold.