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iPhone Teardown Puts Components at $220
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Apple earns more than 50% on each of them sold
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/03/AR2007070301488.html
Relax mate, its just the cost of hardware in the iphone, it does not include R&D (which would have been huge for a Rev A), cost of software development and maintenance (eg additional software in development, etc), cost of packaging and advertising, cost of assembling the parts and transportation, costs of testing, etc. I wouldnt be surprised if they are earning only around 100$ per phone at this stage. slowly the margin they are getting should increase to a higher percentage as costs go down and the whole process becomes more efficient.
Without even looking at the link, let me guess -- iSuppli? They're notoriously inaccurate, don't account for anything that enters into real-world manufacturing & distribution costs, guess at most of what they claim are component costs (since they don't have access to the actual components), and on, and on, and on...
I work for an OEM (similar to Apple, we design and manufacture our own hardware and the software that runs on it), and our best margin, after amortizing development costs over five years, is on the order of 34%. This is for equipment that's been in production for over ten years!
Realistically, true gross margin for the iPhone is more like 17-25%, and net is a good bit tighter. I'd be surprised if the actual net is more than $75 a unit, but knowing Apple's muddying of their 10Q's and annual statements, will still be darn near impossible to discern.
It's Business Accounting 101, and either iSuppli either doesn't understand it, or ignores it intentionally (more likely, because they get quoted by national press that way.. )
I work for an OEM (similar to Apple, we design and manufacture our own hardware and the software that runs on it), and our best margin, after amortizing development costs over five years, is on the order of 34%. This is for equipment that's been in production for over ten years!
Realistically, true gross margin for the iPhone is more like 17-25%, and net is a good bit tighter. I'd be surprised if the actual net is more than $75 a unit, but knowing Apple's muddying of their 10Q's and annual statements, will still be darn near impossible to discern.
It's Business Accounting 101, and either iSuppli either doesn't understand it, or ignores it intentionally (more likely, because they get quoted by national press that way..
)Apple earns more than 50% on each of them sold
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/03/AR2007070301488.html
You can't be more wrong.
What that is telling you is that the cost of raw materials of the product is around 30% of final sales price.
Then you have to add manipulation, marketing expenses, salary of the people, and etc. etc. in a never-ending list.
Do you have an idea of how much does it cost to move from a 50$ chip to a super-hyped cellphone advertised on TV and sold on a huge building in NY 5th Avenue? An awful lot of money.
30% of raw materials cost is not a small number at all.
And doctors...
But for doctors, medical school loans and insurance, likely take a bigger whack than Apple's R&D.
Well, after all they did spend 3+ years developing it. So, of course they have an outrageous R&D bill to pay.