iPhone is selling for the same price as top Android phones, but iPhone is using cheaper components - that's where Apple higher margins come from.
The iPhone 4 (we looking at the last 3 quarters numbers) has smaller and older tech non-AMOLED displayed, no Gorilla glass, twice less RAM, no NFC chip, no SD expansion, smaller battery, no FM radio, older 5mpx camera, no 4G chip, slower older CPU.
So for the same money Apple consumer gets less phone. Cheaper internals in the sleek packaging - that's where Apple higher margins come from - huge markup. Apple consumer gets milked big time.
Not sure if you're comparing like for like here. When the iPhone 4 came out it was top of the range in pretty much all aspects. It's still a great phone today and it's a year and half old. It does use gorilla glass, by the way. You can't compare the 4 to phones which are being released now or ones which came out months later.
The iPhone 4S is, once again, up against current top Android phones and equals or beats them in most aspects. No 4G or NFC, that's true, but still a top notch display (still highest res on the market I think and, in some ways, ISP is better than AMOLED) and exceptional CPU/GPU. The build quality is fantastic too compared to the rather cheap plastic cases that even some high end Android phones come with. The camera is excellent by the way. Megapixels aren't everything and 8 is more than enough. But it's the speed of the camera and the quality of the shots that are most impressive.
But, of course, all of this misses the point in a major way. A product's value is not the combined total of the bits in the product. If two restaurants both served you the same cut of steak and chips made from the same potatoes would you be happy to pay the same for the one which was burnt, badly presented, where the service was poor and the music was too loud? Of course not. You'd pay more for a meal, even if the raw ingredients cost the same, if it was served on nice plates and you got comfy chair and a pleasant environment. Value is not the same as cost.
That is why Apple is able to charge a higher price for its product - because they have the App store and iTunes. They have great customer service through the Apple Stores and they have iOS which they update regularly even for phones like the 3GS which are very old phones. You know how many Android phones, even high end ones, have never run the latest OS or were out of date and not updated weeks after launch? And of course they're all offering the same OS and can only really compete on price. This drives down prices and margins which is precisely why they don't get after sale support - the manufacturers can't afford to provide the kind of support Apple can because they make such poor profits.
Apple is making better margins because they produce a product which is high quality, support it well and have exceptional efficient supply chain management. High margins are a sign of a great business. Low or non-existent margins are a sign of a business which is failing.
