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Apple's profit margin on the iPhone has fallen from a peak of 74% to 60% over the years

Apple's profit margin on the iPhone has fallen from a peak of 74% to 60% over the years
A chart published by The Information, based on data computed by TechInsights, reveals something interesting in terms of how Apple has priced the iPhone over the years. Even though the Apple iPhone X made news last year as the first handset to be priced at $1,000, iPhone profit margins have actually been declining after peaking with 2009's iPhone 3GS. Apple has been adding more technology and higher quality components into its iPhone models, which explains the drop in profit margin.

Individual iPhone models with the smallest profit margins have been the low end units, like the now dropped Apple iPhone SE. Priced at $399 when launched in March 2016, each unit carried $186.70 in components leaving Apple with a profit margin of 53%. At the peak, 74 cents of every $1 it took in from the sale of an iPhone went straight to the bottom line. Over the last few years, every $1 obtained by Apple by selling a handset has resulted in 60 cents of profits. But don't start putting together a benefit for Apple. Investment banking firm Canaccord Genuity says that even though the Apple iPhone is responsible for less than 20% of industry shipments, Apple takes in 87% of the industry's profits.

What the chart doesn't show is how Apple pockets more money on models that offer more native storage. TechInsights says that the difference in component costs between the 512GB version of the iPhone XS Max and the 64GB variant is $70. Yet, the difference in retail pricing between the two is $350. As TechInsights Cowsky says. "This is Apple laughing all the way to the bank."

Related phones

iPhone X
  • Display 5.8 inches
    2436 x 1125 pixels
  • Camera 12 MP (Dual camera)
    7 MP front
  • Hardware Apple A11 Bionic
    3GB RAM
  • Storage 256GB, not expandable
  • Battery 2716 mAh
  • OS iOS 13.x
iPhone XS Max
  • Display 6.5 inches
    2688 x 1242 pixels
  • Camera 12 MP (Dual camera)
    7 MP front
  • Hardware Apple A12 Bionic
    4GB RAM
  • Storage 64GB, not expandable
  • Battery 3179 mAh
  • OS iOS 13.x
iPhone 3GS
  • Display 3.5 inches
    480 x 320 pixels
  • Camera 3 MP (Single camera)
  • Hardware
    0.25GB RAM
  • Storage 32GB,
  • Battery 1219 mAh
  • OS iOS 6.1
iPhone SE
  • Display 4.0 inches
    1136 x 640 pixels
  • Camera 12 MP (Single camera)
    1.2 MP front
  • Hardware Apple A9 APL0898
    2GB RAM
  • Storage 128GB, not expandable
  • Battery 1624 mAh
  • OS iOS 13.x


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