Apple iPhone 4S is done at Apple's highest ever manufacturing margin of 70%
According to a Deutsche Bank analyst the 16GB unit carries $170 Bill of Materials (BOM), whereas the 8GB iPhone 4 goes down to $140.
It's not only BOM, we have other expenses like R&D as well, but when it's all done and dusted, Apple will probably be making north of 60% on a single unit, considering its carrier subsidies per 16-gigger are about $450, the largest margin in the industry, and its own personal record.
Apple managed to break its own sales records with 1 million handsets sold in 24 hours, compared to the iPhone 4's 600 000 last year. So, in just 24 hours, Apple is at least half a billion richer thanks to its incremental update of the iPhone 4 - a textbook business strategy, indeed.
The thing is that the inherited components from the iPhone 4 are now cheaper to manufacture due to scope, volume and ironing out the kinks. The dual-core A5 has been already developed for the iPad 2, so its production price is just slightly above that of an A4, and Apple has obviously kept the 512MB of RAM, as one Infinity Blade 2 developer indicated. The camera upgrade from 5MP to 8MP and the "world" baseband radio come at only a few bucks difference wholesale, as comes the dual-antenna design.
All that, of course, doesn't stop Apple from charging $100 extra between the 16GB, 32GB and the 64GB versions, not to mention the old cases most likely won't fit on the slightly redesigned phone. Putting it all together - priceless.
11. davecann2 (Posts: 460; Member since: 15 Mar 2011)
Dude.... didn't you already post this comment in another article. Maybe your right... Maybe a lot of people who preordered the phone are sheep. What are your comments make you out to be? My guess is your one of the following...
Or maybe you’re the sheep following Android?
14. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
no he is just a valueless commenter who really doesnt do anything…
67. Alantef (Posts: 288; Member since: 14 Sep 2011)
to both davecann and lucas......as i quote from the great Samuel l Jackson.......“If my answers frighten you then you should cease asking scary questions.”
68. Alantef (Posts: 288; Member since: 14 Sep 2011)
and “I don’t remember asking you a goddamn thing!”
71. davecann2 (Posts: 460; Member since: 15 Mar 2011)
???? Ask me a question???
No you didn't! You did in fact make a comment of which I replied too because it was useless, factless, baseless and ignorant... You Sir are an idiot.
To make my point even clearer... you gave yourself a thumbs up! STUPID STUPIS STUPID
29. jogutier (Posts: 324; Member since: 12 Feb 2010)
If he means that jobbs death help this spur. I will have to agree.
49. ardent1 (Posts: 2000; Member since: 16 Apr 2011)
These are sheep with money -- that makes a difference!
2. John (unregistered)
Well, not only BOM and R&D, there are also things like - support & services, assembly, shipping, licenses, taxes etc., which add up to the cost price.
8. Daniel.P (Posts: 102; Member since: 14 Jul 2011)
True - Apple has incredible cost discipline which allowed it to keep OpEx under 10% of revenue last quarter, and general R&D hovers around 3% or less, probably less in the case of the iPhone 4S. The German analyst estimated 71-73% gross margin, which given the above numbers makes the iPhone 4S operating margin hover around the 60 percentile, which is truly something...
13. John (unregistered)
Thank you Daniel for clarifying that.
18. remixfa (Posts: 14255; Member since: 19 Dec 2008)
Go apple for being a capitalist. The market will price the equipment. If the market doesnt like it, the equipment will drop. Obviously the market doesnt care about pricing. It would be interesting to see the spread on the different versions of the i4s as far as which carrier and GB iteration is the fastest selling. Obvious answer would be ATT and 16gig, but ya never know.
I bet half those idiots that are protesting wallstreet's "greed" over the last few days have an iphone, the pinnacle of greedy capitalism. oooh the irony.. lol
33. corporateJP (Posts: 2431; Member since: 28 Nov 2009)
"I bet half those idiots that are protesting wallstreet's "greed" over the last few days have an iphone, the pinnacle of greedy capitalism. oooh the irony"
+1 to this.
72. ZayZay (Posts: 571; Member since: 26 Feb 2011)
Wait you +1'd yourself this for this comment?????
Abusing the trend I see.
36. Juice (unregistered)
"I bet half those idiots that are protesting wallstreet's "greed" over the last few days have an iphone, the pinnacle of greedy capitalism. oooh the irony.. lol"
47. ardent1 (Posts: 2000; Member since: 16 Apr 2011)
Gross margin is simply the difference between the sale price and the cost of material, direct expenses, and direct labor. R&D or S,G,& A (like marketing, etc) expenses are AFTER Gross Profit and before OPERATING MARGINS.
Also keep in mind the retail price IS NOT the price that Apple sells to the carrier. In a related Sprint article where Sprint will spend about $20 billion for about 30 million iphones, Apple cut a deal where the average price is north of $600 a device.
To calculate Apple's gross margin, you would use the $600 bogey. I hope you find this information helpful.
54. remixfa (Posts: 14255; Member since: 19 Dec 2008)
no.. ardent.. they are not.
like normal, you are incorrect and judgemental
the gross margin aka the gross profit margin is =
= total revenue - total cost of goods sold
..... total revenue.
The "cost of goods" is ALL the imbedded costs of manufacturing, labor, supplies, R&D, utilities, ect.. per unit multiplied by units sold. The more items you sell, the lower the imbedded costs get as they are differed over more units.
Also, the sprint RUMORS were proven to be just a RUMOR. There was never any facts to prove what Sprint may or may not have paid for the iphone to get on sprint. More than likely they paid next to nothing or at least no more than VZW/ATT did to get them on their network.
While the full retail value of the phone is not what the companies are paying for it, with apple its very very close in % as Apple controls the full retail sale price of the phones wherever they are, so its a decently reliable value.
56. ardent1 (Posts: 2000; Member since: 16 Apr 2011)
remixfa, you are such the villiage idiot and that post again shows why you are so f*cking stupid!!.
Apple is a publicly traded company and must comply with Regulation SX
Per Reg SX, it gives the accounting decision making to FASB (the financial accounting standards board)http://www.fasb.org/home
And if remixfa had learn HOW TO READ besides being so f*cking stupid, then he should have come across the following:
and read about COGS:
COGS EXCLUDES certain expenses: "....excludes indirect expenses such as distribution costs and sales force costs." That means COGS also excludes R&D.
The Sprint was just an example of discerning the average sale's price to come up with the correct REVENUES bogey.
remixfa, the villiage idiot once again shows why he deserves to be call the villiage idiot. Now, kindly STFU!!!
Man, you are just so dense it's unbelieveable!!
57. remixfa (Posts: 14255; Member since: 19 Dec 2008)
lol, i love when you attack me, because you prove yourself wrong with your own statements..
"COGS EXCLUDES certain expenses: "....excludes indirect expenses such as distribution costs and sales force costs." That means COGS also excludes R&D. "
NO IT DOESNT, you frikkin dense moron. SALES and R&D ARE 2 SEPERATE THINGS. sales.. aka sales people DO NOT research and develop products... lolololol
Sales are paid for by retail mark up at the store/direct/indirect level... AKA, the WHOLESALE/RETAIL cost to the STORE. Wholesale/Retail + Mark up is what the consumer.. aka You and I pay.
please.. keep it up.. your a riot. :)
62. ardent1 (Posts: 2000; Member since: 16 Apr 2011)
Let’s get something straight! Calling someone (like remixfa) who does stupid things STUPID, is not “attacking”, but a statement of fact. Call someone (again, like remixfa) who acts like “the village idiot” the VILLAGE IDIOT of phonearena.com is also not an attack, but a statement of fact. In addition to being the village idiot, remixfa is now acting as a petty and sore loser.
Did you read Reg SX? -- Obviously not!
Did you read the FASB pronouncements? -- Obviously not!
Do you understand US GAAP? -- Obviously not.
Under US GAAP, direct expenses are captured by the gross profit margin and indirect expenses are captured by the operating profit magin. Indirect expenses are typically SG & A expense, R&D expense, indirect depreciation expense, etc. SG&A and R&D are BOTH example of indirect expenses that is obviously too difficult for remixfa, the village idiot of phonearena.com to understand.
Again, the quote from investopedia.com uses the phrase “such as” in “…excludes indirect expenses SUCH AS distribution costs and sales force costs.” Here is what investopedia.com has to say about R&D expense – they are operating expenses!! “What Does Research And Development (R&D) Expenses Mean? Any expenses associated with the research and development of a company's goods or services. R&D expenses are a type of operating expense that can be deducted as such on the business tax return. This type of expense is incurred in the process of finding and creating new products or services.” (source:http://www.investopedia.com/te
The final proof that remixfa is indeed the villiage idiot is to look at Apple’s SEC filings:http://yahoo.brand.edgar-online.com/displayfilinginfo.a
spx?FilingID=8049595-4408-8849&type=sect&dcn=0001193125-11-192493Guess what – R&D and SG&A expenses are both under OPERATING EXPENSE. Who would have f*cking guessed!!
The “riot” is how remixfa continues to talk out of his ass.
63. remixfa (Posts: 14255; Member since: 19 Dec 2008)
you still dont get it, so please keep talking. this is fun. :)
keep calling me names, like EVERY OTHER time you have gone and made it some personal war against me, you are wrong and too stupid to notice.
so pleeeeeeeeeeeeeeease keep it up. :)
64. remixfa (Posts: 14255; Member since: 19 Dec 2008)
and i notice you still thumb yourself up every time.. lol.
i guess someone has to pat you on the back for your stupidity.
75. ardent1 (Posts: 2000; Member since: 16 Apr 2011)
Pointing out remixfa is the village idiot is making a statement of fact. You come out in an attempt to catch me making a mistake when in fact, you continue to talk out of your ass. You didn't read or understand what that website stated about operating expenses. You don't understand US GAAP. You didn't bother to look at Apple's SEC filings. Despite all these overwhelming facts, remixfa believes he can do no wrong. What an village idiot!!
And AS USUAL remixfa doesn't realize lots of people are giving me the green thumbs up in support. I can give myself a green thumb, but I can't give myself multiple green thumbs and this point is beyond remixfa's comprehension.
74. bobparker (unregistered)
your parents must be so proud. The amount of energy you two put into being such complete tossers is amazing
3. dha_george (Posts: 54; Member since: 27 Jan 2010)
$390,000,000 roughly apples day one profits based on phonearenas facts in this article
4. DROIDX0430 (Posts: 466; Member since: 24 Nov 2010)
479.00 profit on every phone sold...you gotta give it to apple...you throw the crowd a bone and they all go for it..no matter if it is still the same phone released i)a year and a half ago. Same size..same look. Used ipad 2 chip. Added siri with no lte. No wimax. No hspa for att...
12. clevername (Posts: 1436; Member since: 11 Jul 2008)
Im assuming you mistyped here, you said "no hspa for att..." even the iPhone 3g, 3gs, and 4 all had hspa. You may have meant hspa+. Which technically mo it doesn't achieve 21mbs but tmo and att call 14.4 mbs hspa+. And regardless of whether or not we consider that to be true the ITU seeks to be giving in to carriers faster than a hooker with low self-esteem. So the ITU is sating it might as well be 4g too. So even tho apple was careful and deliberately didn't call it 4G, att is.
55. remixfa (Posts: 14255; Member since: 19 Dec 2008)
clever, they did not
they use HDSPA. The iphone4s does not use HSPA+ either, it uses dual HSDPA/HSPA. There is a difference.
69. corps1089 (Posts: 492; Member since: 20 Jan 2010)
Technically correct: the best kind of correct!
44. E.N. (Posts: 2578; Member since: 25 Jan 2009)
"Proving once again that its incremental annual upgrade strategy still works flawlessly"
There goes Apple stealing ideas from Android again. Google should sue.
5. DROIDX0430 (Posts: 466; Member since: 24 Nov 2010)
649.00 msrp. Phone worth 170.00. 479 dollar profit. Same phone vice a few tweeks here and there. Priceless. I guess the fans will distinguish themselves with other iphone users is....do you have the s..
6. WirelessCon (Posts: 309; Member since: 11 May 2010)
Brilliant business. Dumb consumers. Occupy Wall Street would be on to something, except for all the apple products in their hands. And if they didn't have Apple I'm sure they'd have Google.
There can be no revolution when you've already given in.
7. biggles (Posts: 222; Member since: 15 Oct 2009)
The profit margins are gross, alright. It's downright irresponsible in a poor economy to be pulling profit margins like this. The public doesn't want to hear that the mounting deficit is directly related to Apple when people are skipping responsible bill payments to own the latest and greatest iPhone because Apple insists on annually providing the next upgraded feature. Their profit model is based on blocking the consumer from future proofing their purchase. I-R-R-E-S-P-O-N-S-I-B-L-E
10. thethingis (unregistered)
While it's YOUR choice to buy the latest and greatest..
I don't completely disagree with you.
Another reason I HATE Apple.. they price their products so incredibly high.. another tier all together. Why? Because they can. Many would say it's great business..
As a consumer i feel it's a greedy and disgusting behavior to gouge the consumer like this.
I would LOVE to see all the carriers band together and say.. enough of your fixed pricing.. follow the same pricing that EVERY OTHER PHONE HAS, or get off our networks.
17. clevername (Posts: 1436; Member since: 11 Jul 2008)
Not counting the 32 and 64gb versions the iPhone is very aggressively and comparably priced compared to other smartphones. And with carrier subsidies its exactly the same as other new smartphones of high calibur. .
45. E.N. (Posts: 2578; Member since: 25 Jan 2009)
Exactly. And although monthly pans are higher than what they use to be, I remember the pre-iPhone days when a smartphone costed $400/500+
9. Gawain (Posts: 406; Member since: 15 Apr 2010)
I'm sure we won't hear a peep out of the Wall Street protestors out to end all "evil greedy corporations"...of course, many are chronicling their escapades with an iPhone or Sony while wearing gear bought from Backcountry and shoes made by Nike, or New Balance, etc., while drinking a Coke and getting their food from Trader Joe's (big) or Whole Foods (really big)...
Props to Apple for building such a brand and following that they can command such prices and apparently serve their customers at the same time. Take what you can get.
15. Mdw (unregistered)
If people CHOOSE to buy it that is their prerogative. Apple did not hold a gun to their heads and say "buy my f-ing product.
If someone has bills to pay and they choose to waste their money on a phone, they will have to deal with the consequences of their own irresponsibility. That is not Apples problem.
Did I order an iphone? No. Will I order an iphone? No. Do I have or want Any Apple products in my home? No. I just don't think it's right to jump on Apples case because they overprice a product that we as a nation DO NOT NEED TO LIVE! Gas prices are different. I quit a job because I was spent an average of $600/mo for gas just to commute back and forth to nowhere else but work last year. I was only making $1000/mo after taxes and insurance. That left me with $400/mo to pay for rent ($450 for a 1 br 1 ba) br 1 ba) daycare ($150/wk) food, bills, etc. Don't complain about apple. I give them props for making money selling a completely unnecessary item and making so money in the process. Wish I would have thought of it first.
You should instead focus your energy towards people ripping others off AGAINST their will. Gas prices (although they are going down), Federal income taxes that go to help maintain federal penitentiaries tennis and golf courses, police forces that arrest the wrong people and make pay for court costs anyway. Stuff like that
16. maxican16 (Posts: 364; Member since: 29 Sep 2011)
Funny, don't see a lot of the typical fanboys here, touting apple's continued success. Could it be they're finally realizing that success they are so quick to flaunt over their counterparts comes at their own expense? Unlikely. Does apple make a great product? Yes. But it's facts like these (along with other stories about horrendous factory working conditions and apples closed, draconian environment) that will prevent me from following the herd. Give me the latest hardware on a device I can customize to my own liking.. it seems only fair to do so considering the money I pay.
19. Sawwgs (unregistered)
Lol I have no idea what people are talking about when they say the iPhone cost too much. All the droids when they first come out are either two or three hundred. And if you buy the latest droid without contract it cost just as much as iPhone with no contract.....its funny seeing people bitch about cost when most of the world have to straight up buy unlocked phones which cost so much more
25. onlyifuknew (unregistered)
What you fail to realize is yes they are similar prices w/o a contract. But they are talking about PROFIT MARGINS.
20. GH (unregistered)
This isn't weird at all, Apple is well known for its large price tags... the so called premium for owning an Apple product. You really bought a brand with a phone stuck to it and people like that, let them be.
21. frustyak (Posts: 197; Member since: 08 Mar 2010)
Christ, if I have to hear one more peep about 'evil greedy corporations' and 'obscene profits' from people that apparently don't understand basic economics, my head will explode.
The market will dictate how much something is worth. It is worth what people will pay for it, no more, no less. Apple has a fiduciary responsibility to its shareholders to maximize the return on their investments. To behave in any other manner would be irresponsible.
Every business is in business to make profits. Instead of applauding when a company is able to succeed in a down economy, some people can only protest. We should be holding Apple up as an example of what people who are driven and passionate about what they do are able to accomplish.
22. onewrongfact (unregistered)
The dual antenna design not only a couple of buck different.
It would be an expensive antenna gate part II (vs. samsung).
24. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)
One interesting in this article is all the people bashing the wall street protesters. Not sure what that's about. The protesters are right that there are ridiculous things going on with corporations and our government. The fact that corporations pay hardly any taxes is one. Why would you bash people that are standing up for your rights. Interestingly enough it seems to be android users that are bashing the protesters.
On the flip side to all the usual Apple bashers. Apple is the company that DROPPED the smartphone price down to $199 for the consumer. Before Apple youd pay $300-$400 for a smartphone. The profits that they're making on iPhone is largely subsidized by carriers. Even the full retail price is right in line with other phone makers. Idiot fandroid trolls.
26. moofoodooloo (Posts: 137; Member since: 04 Jan 2011)
$649? That maybe MSRP at Best Buy.. go to a carrier store and find me an Android that MSRP's at $649. Not Best Buy, not a Radio Shack.. a carrier store.
And how much is the 64gb version? $850 for 64gb's of unremovable memory? I'll pass.
30. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)
Retail on most high end androids is $500-$600 dollars. That puts them in the same price range.
42. vette21man (Posts: 351; Member since: 06 Apr 2011)
Agreed with taco on this one, Samsung Galaxy SII retails for ~$700...regardless of where you get it. It's only when you agree to a 2yr contract with a carrier that the price drops to $199. This goes for any phone, really.
65. vette21man (Posts: 351; Member since: 06 Apr 2011)
Sorry, ebay does not represent retail pricing.
Manufacturer's Suggested Retail Price (MSRP) is the price suggested by the manufacturer (Samsung) that retailers sell the product. It is usually high, In the Unlocked SGSII's case, $899.99.
List price and Amazon's price shown:
58. remixfa (Posts: 14255; Member since: 19 Dec 2008)
full retail can get astronomical.
the difference being, pound for pound you are paying a lot more and getting a lot less for an iphone at full retail. 600 for a single core phone that was new nearly 2 years ago?? yea right! 650-900 for a nearly year old dual core running middle of the pack at best? no thanks.
Its your money, buy what you want. Some decisions are better than others though.. lol
35. corporateJP (Posts: 2431; Member since: 28 Nov 2009)
"Why would you bash people that are standing up for your rights"
The right to get everything handed to everybody for free?
The right to redistribute wealth?
I'm against socialism and communism, I'm against bank bailouts, and I'm against government intervention into private business (including automakers).
It would be one thing if they were protesting debit card fees or the mortgage crisis, but they're not.
And like someone said, it must just chap asses to know that most of these idiots are out there protesting "corporate greed", yet they are holding phones made by the world's most profitable corporation.
Further proof that America is wearing one giant asshat at this point in time.
50. L3610n (Posts: 47; Member since: 01 Jul 2011)
I agree COMPLETELY.
Then they b*tch about wanting a revolution and when they get pinned down to the ground, they cry??
Not saying it's right but a revolution usually equates with violence, blood, and death.
60. remixfa (Posts: 14255; Member since: 19 Dec 2008)
taco, the protest is a joke
its an orchestrated event by the left wing democrats, bussed in by democrats, and heralded by every leading democrat in the party. It is meant to make Obama look like he is middle of the road right before elections, because if he defends them while "calming" them down, he looks like he is standing up for jobless people and being a middle man between them and those eeeeeeeevil banks. The people there dont have a message.. they are making it up as they go. Pay attention to the signs and statements those "protestors" give. most of them are just socialists demanding an end to American enterprise.
Its all just a giant idiotic democrat publicity stunt to say "hey, we know your mad, dont join the tea party, join us in stead".. and its not working.
thats why we make fun of them. :)
70. corps1089 (Posts: 492; Member since: 20 Jan 2010)
Hey someone got politics in my cellphones!
Hey someone else got cellphones in my politics!
I guess it is inevitable when discussing economics and the current administration is selling my soul to improve the lives of those "less fortunate"...
31. superguy (Posts: 281; Member since: 15 Jul 2011)
Of course they can sell it at a high margin. With the reuse of the previous generation with some modifications, that saves a ton on parts and R&D. Revenue that normally would have went to paying that expense now is profit thanks to the savings.
Great for Apple's business. However, it does show that iSheep will buy just about anything Apple slaps on it, even if it's just an incremental update from the previous generation.
32. BarryAllen (unregistered)
I sold my old iPhone 3Gs for $154 and an even older Motorola razr v9m for $39 to Best Buy. $193 to put towards the new iphone 4s. I can still get $262 ($275 if i had of traded it in a couple days ago) for my iPhone 4 if I decide to trade it in. Still might keep it for a back-up. Point is, Best Buy is just one of many places you can trade in your old iPhones or any other phone in decent condition for a gift-card or a check(less money) to put towards a new phone. You might even be able get some money back for that weak-ass battery hoggin, fragmented OS havin', app developer deterrent Android phone in your pocket.
39. networkdood (Posts: 6330; Member since: 31 Mar 2010)
Nope, my awesome cappy still works like new....since 7/10