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iPhone provides nearly twice the margin of other smartphones

Posted By TelecomTV One , 06 July 2007 | 0 Comments | (0)
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Much has been made of the iPhone’s US$499 and $599 price tags – a sum roughly five times the amount most US subscribers traditionally shell out for a new handset – and there is a growing groundswell of opinion that Apple and AT&T are pushing their luck to the limits with their sky-high iPhone prices. And that uncomfortable "ripped -off" feeling could well be exacerbated by new estimates released by iSuppli.

Margins on the device are running at an astonishing 55 per cent compared to below 30 per cent for most other smartphones. An analysis of the $599 iPhone indicates a manufacturing cost of $265.83 per unit although the factoring in of royalty payments and delivery logistics would increase that figure. The iSuppli figures also show the iPhone’s much-vaunted "button-free" touch screen costs just over a tenth of the full price of manufacture, coming in at $27 per unit.

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iSuppli estimates that chipsets supplied by Infineon Technologies cost about $15.25 each. Apple and AT&T are being secretive about the details of their exclusive agreement but iSuppli's figures, if they are accurate (and there is as yet no indication that they are not), show that the two are making a very hefty margin indeed and the speculation is that AT&T could well be pocketing a goodly sum from iPhones sold in its branded retail stores in the US. Rumour still has it that Apple's first partner of choice, Verizon Wireless, pulled out of negotiations over Apple's excessive demands on a share of monthly service revenues. Since it went of sale, during the week of the annual US Fourth of July holiday, sales of the iPhone have been spectacular. More than half a million unit had been sold by last Sunday evening alone.

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