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."

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58 Comments

1. koioz unregistered

Long live Frankenstein phone!

2. torr310

Posts: 1659; Member since: Oct 27, 2011

“Apple is trying to pack more and more into a phone. As they do that, designing the phone becomes more complex and it gets more expensive."- So are other top phone manufacturers.

31. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

Apple hasn't packed anything into the iPhone. Pa tell I'll mg lies as usual. They are buying expensive components on some level, like the Face ID which isnt worth the $15 they paid for it. Compare the original iPhone X to the Note 8. And at $1000 the Note 8 offered far more capability, better cameras, bigger batter, higher IP rating, higher resolution and so much more. Fast forward to 2019 and the XR skips on features including hashing the same PPi as the iPhone 4 for $750. Apple is not giving more. They are simply charging more.

55. Finalflash

Posts: 4063; Member since: Jul 23, 2013

It's the components Apple can't squeeze that cost the most like the screen and QC chips. They're trying though, to pack in as much cheap crap as possible to make in more.

3. Supah

Posts: 692; Member since: Mar 08, 2017

kiko da Kellyanne Conway of PA, Leo da 'No display' iMultitasking MC, whatev, midan da iLying iBro, umaru-chan, Nate Diaz, piyath, Venomxydanomercybiach & Peaceladyboy: "This is iHorrible. Please let us iPay more and get iLess!!"

10. NateDiaz

Posts: 1088; Member since: Mar 03, 2018

"Please let us iPay more and get iLess" Well someone who's got money will spend it on whatever he wants. Can't say the same for you kid, you wait tables at a restaurant surviving on tips. Poor soul.

33. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

Because you have this stupid notion that because you can afford to pay for something, that the price is ok. Again the fact is this. It's not better because it costs more, it suppose to cost more because its better. A Ferrari cost more than a Toyota because it better. How many things can you list about the iPhone XS Max that are better than the Note 9. I can list 50 things right now that make the Note 9 better with both phones starting at $1000. So yes with Apple you have always paid more. MACS do considerably less than even the cheapest Windows PC, yet cost 4 times as much as most of them. Not to just pick on Apple, what Microsoft is charging for the Surfacebook is BS for what if offers. A fact is a fact. The iPhone X are hardware is less capable then the Galaxy S7 edge. The S7 edge was a $750 phone 2 years ago. The XR with less cost that same old price? When yet the S7 edge has better display, better cameras, better .multitasking including multiwindow, a bigger battery, higher IP rating, better modems and more. Apple has trained iFans that less is better and paying more for less is the new norm for them. And they accept it with open arms. The latest iPad for $1000 based on info at GSM arena is basically last years model with a new look, faster CPU and slightly better cameras and modem. Everything else as far as software is the same. Other than getting the iPhone X UI. It does do anything more. You can buy a 1TB SSD for less than what Apple wants for it. And they wasnt $1800 for that iPad? It cant even do what a Mac does at $1800. Come on dude at least be real. Just because you can pay the price which many can, doesnt mean you should have too. Thatbis why the vast majority dont. The vast majority of people can afford Apple products. They just dont buy them because they don't see the value. I will never say 2 products priced the same shl UK ld be ide rival, but kn some level they should be. In every category you can get a better product vs Apple doe as much as 50% less and still get a better product that does more. That is a provable fact no matter what you say or feel otherwise.

4. torr310

Posts: 1659; Member since: Oct 27, 2011

Well, even so, the profit margins are still too high for Apple...

9. torr310

Posts: 1659; Member since: Oct 27, 2011

By the way, they are making more and more profits from services!

6. AbhiD

Posts: 803; Member since: Apr 06, 2012

Decreasing in terms of %, not the actual value in $. In reality their profit in Dollars has been on a steady rise.

7. GreenMan

Posts: 2697; Member since: Nov 09, 2015

Apple's profit margin on iPhones is falling, eh? In my opinion; it's because people are buying older iPhones at a discount instead of newer 'Christmas Phones' (XS Max = Christmas!) and... Also because Apple is relying more and more on third party manufacturers such as Qualcomm, Samsung, LG and Intel to name a few. No one is going to provide you 'spare parts' with ZERO profit margin! But that's just me, the ol' and humble GreenMan so... G'Day!

8. obedchuni

Posts: 335; Member since: Jun 16, 2014

where is the son of google techie....he would have love this article, as his love for samsung and google is more than a father to his son..

13. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

Phonearena, you are mistaken profit margins (net profit/revenue) with gross margin ([revenue-cost of goods]/revenue) which is what the article is talking about.

17. Peaceboy

Posts: 640; Member since: Oct 11, 2018

Only android OEMs can dream off.

19. almostdone

Posts: 448; Member since: Sep 25, 2012

No need to dream. We prefer less greed and more value. Bang for your buck. Not take as much money as possible from the sheeps.

24. scarface21173

Posts: 690; Member since: Aug 17, 2014

So you are happy you are being shafted big time.

37. Valdomero

Posts: 677; Member since: Nov 13, 2012

I don't defend Apple even tho I own an iPhone, I think it's a great device, but blindly paying $1k for a phone is unacceptable, and people is starting to realize this. In the US buying an iPhone on contract is super cheap and won't cost you more than $80/month, on other parts of the world this isn't the case, many people can't afford paying $80/month for 18 months neither paying full price for the device, saying that, the price of the devices in the US is nothing compared to the prices of other countries. For instance, where I live the XS costs $1299 for the 64GB version, the 256GB costs $1450, while the XS Max 512GB costs $1859!!! all without taxes... So as Apple products keep rising many people will buy last year's model, heck, even holding their old model for more years. I'll keep mine at least for 2 more years, then I'll consider buying the new model of 2020

39. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

This video I watched recently, show how Apple is continuing to raise prices on all their producys; for mundane things or simply nothing at all. https://youtu.be/uS05T1_2WCU Apple has always been greedy. Now they are being beyond greedy. This is pure wallet rape.

44. jibraihimi

Posts: 806; Member since: Nov 29, 2011

Sometimes I feel that, these market analysts are paid agent of Apple, just trying to increase hype and sentiments for greedy company like Apple, how the heck Apple is getting less profit margin on iphone Xr or iphone Xs?? Apple is just trying to get some sympathy from buyers, so that they start buying their latest phones with old techs again......iphone xr isnt selling well, and slowly maybe their other products will also start showing less sell, unless Apple stops its greed, and try to include more features and reduce price of its product...

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