Don't Buy In To Those iPhone Per-Unit Profits Just Yet
from the premature-accounting dept
Soon after the release of every new Apple product (and other companies' new gadgets as well), some analysts tear one open and try to figure out how much its components cost to get an idea of the margins on each unit that's sold. A recent teardown of the iPhone suggested a per-unit cost of $200 for the 4 GB version, and $220 for the 8 GB one, suggesting that Apple's making a huge profit on each iPhone it sells. But, as Stephen Wildstrom at BusinessWeek points out, taking these teardown estimates too seriously can be foolish. As he notes, the cost of many of the components -- including the device's centerpiece, that huge, glorious touchscreen -- is little more than a guess at this point. But perhaps more importantly, focusing on the components' cost ignores the not inconsiderable costs Apple sunk into developing and marketing the iPhone. Certainly the iPhone has the potential to reap huge profits for Apple, but it's a little premature to be tallying up the figures just yet. Furthermore, as the initial supply looks to be drying up, it's worth wondering just how long Apple can keep the sales momentum going.![Hide This Hide this](https://ii.techdirt.com/s/t/i/topclose.png)
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Reader Comments
Subscribe: RSS
View by: Time | Thread
If im not mistaken, this phone has been into production for over 2 years and even resources were taken away from OSX development to finish the iPhone.
Having said that, i love my iPhone so that 2 years was spent damn well.
[ link to this | view in chronology ]
Re: Sohrab's love of iPhone
[ link to this | view in chronology ]
So back on topic. There are some cold hard facts that a teardown can provide. And that would be the actual component costs of an iPhone. Yes it is premeture to claim the manufacturing cost - retail price = $$$ profit! $$ but trick is to not get caught up in the conclusions draw by the analysts writing these articles. Just take the facts and run.
Besides we all know that a possible interpretation of the word analyst is rumor mill.
[ link to this | view in chronology ]
Re:
Wii is outselling the X-Box 360, so the Wii is in first right now.
The Wii also makes a profit (aside from R&D) off of each unit since the first sale.
With the amount of units sold, they've probably paid off the R&D costs by now =P
Btw, I want the PS3 to come out on top. I'm not a Wii fan.
[ link to this | view in chronology ]
Re: Re:
Why in gods name would you want that huge piece of shit to be in first? All $ony did was take everything they could from M$, and try to surpass M$ in the hardware.
At least Nintendo was intelligent and made the Wii a SELLER from the start. Even you said The Wii also makes a profit (aside from R&D) of each unit since the first sale. Now, that says something. Because the PS3 is a LOSS LEADER for $ony right now. That means they are actually DUMPING hundreds of $$ IMHO
[ link to this | view in chronology ]
touch pannel
Not a guess ....glorious touchscreen should be around $9 to $14 max the main cheese in the softwear people.
It only has 8 GB big deal.
Had enough of this IPHONE if they had it for all the carries it would of made history I est 1.3 million min on the first 2 days.
Steve enjoy it while it last buddy.
all good things gome to an end soonner or later.
[ link to this | view in chronology ]
Re: touch pannel
[ link to this | view in chronology ]
Re: touch pannel
and looking at your post, linguistic skills fall in the "(very) soon" category
[ link to this | view in chronology ]
Re: touch pannel
[ link to this | view in chronology ]
What R&D costs?
[ link to this | view in chronology ]
Re: What R&D costs?
Since the other companies should be looking at this and seeing where they went wrong things should improve, but that is all speculation.
As it stands Apple has a device that bests the rest and I haven't heard of any anything, except the Open Moko, that is even attempting to fix this problem.
[ link to this | view in chronology ]
Re: What R&D costs?
But honestly, it lacks too much. the interface does NOT make up for it. if the rumors are true that there'll be an iphone-ish ipod, that'll be somewhat neat.
What they need is the ability to make real playlists on the ipod itself. Like a full version of iTunes ON the ipod plus that neat touchscreen interface. That'd make a great music player.
[ link to this | view in chronology ]
per unit deaths?
http://www.msnbc.msn.com/id/19614050
[ link to this | view in chronology ]
Yeah but none of them did, did they genius?
You could say exactly the same thing about ANY item ever, including the wheel and the light bulb.
BTW, bringing the first widely available multi-touch product to market has tremendous R&D costes behind it. And anyone with a brain probably wouldn't classify CNN, Time magazine, and the Wall Street Journal as "hype from Apple fan boys".
[ link to this | view in chronology ]
Re:
Without such fervent loyalty, the iphone wouldn't have made such a huge splash. if some other company made it, even if it was *exactly* the same, it wouldn't have gotten that noticed.
[ link to this | view in chronology ]
http://www.msnbc.msn.com/id/19614050
There you have it folks, straight from the bull's arse!
I wonder why there was no coverage of a real tech story like:
http://news.bbc.co.uk/2/hi/business/6275728.stm
[ link to this | view in chronology ]
Saving R & D, Balmer style
[ link to this | view in chronology ]
Re: Saving R & D, Balmer style
so, yea, it does suck, but its not 2011.
Other companies will release iPhone knockoffs and a few of them will probably be better, but none of them have the fan-base that Apple does. The iPod is not the best, but thats not the reason it's in first either. It's cause of customer loyalty and great, AMAZING business strategy with iTunes.
[ link to this | view in chronology ]
Re: Re: Saving R & D, Balmer style
[ link to this | view in chronology ]
-The mac wasn't the first personal GUI computer geared towards non-techeads, it was the best one.
-OS X wasn't the first PMTS operating system, it was the best one.
-The ipod wasn't the first mp3 player, it was the best one.
-The iphone wasn't the first ....
I think you get the picture.
By the way #11 is right, the Microsoft rip-off should ship by 2011 (see list above)
[ link to this | view in chronology ]
Re:
The iPod is big cause it started early. The iPod had a lot of sales in the beginning and due to iTunes, people wouldn't switch to another player, even if it was better. thats one *amazing* business strategy on their part.
the iPhone is *not* the best. it has a nice interface. thats it. it lacks a LOT of features that a LOT of people want. the only reason its selling a lot is due to people thinking apple is like some way of life and completely over-hyping it.
Yea, it *is* awesome. i don't deny it. it has some unique features. but its *not* the best. its just the only one with the multi-touch screen right now.
[ link to this | view in chronology ]
Re: Re:
Figuring out what the "best" anything be it video game, cell phone, movie or whatever is a matter of personal taste. This is why any "What is the best _____?" thread of any forum on the internet runs the risk of decending into the firey depths a flamewar.
While popular on the other hand is a factual statistic of how many people think something is the best of its category. The iPod may not be the best mp3 player but there is no question that it is the most popular given how much of the mp3 player market it commands. And it is only popluar because most people believe it is the best. If the tide turned and all of a sudden the Zune became the most popular then it would be because more people would believe that the Zune was the best mp3 player.
And if that doesn't clear it up just remember that right now Paris Hilton is one of the most popular "celebrities" (and I use that term very loosely) right now.
[ link to this | view in chronology ]
Re: Re: Re:
I don't agree that what the best player is is a matter of personal taste...what player you like best is, but I do think it would be possible to come up with a set of objective criteria, as well as objective scoring for those criteria...
examples of said criteria could be: storage size, battery life, sound quality,...
[ link to this | view in chronology ]
Re: Re: Re: Re:
Which is "the best" vehicle? A Rolls Royce? Well, maybe, unless you are talking about "the best for taking 7 people and my boat to the lake". Fitness of purpose is what defines "best".
The best MP3 player may be the one that costs the least, is most durable, and compatible with Linux -- for one person. The best phone may be the one that creates the most envy in your acquaintances, regardless of voice quality or range.
What's "best" for you may be useless for me, because I have different needs and/or budget.
Nothing made by man is ever "the best" for everyone, not even Oreo cookies.
[ link to this | view in chronology ]
Shut up stupid. - Collin Quinn
PS. Man, I can't believe that Paris Hilton, she gets me so steamed I have to complain about it every chance I get.
[ link to this | view in chronology ]
Why AT&T???
I hardly leave the country and when I do I sure as hell do not plan to be working!!! Where is the love for CDMA!!! I wonder if AT&T will ever be close to Sprint and Verizon on wireless speed!
[ link to this | view in chronology ]
Re: Ratzo's hate
[ link to this | view in chronology ]
Re: Re: Ratzo's hate
was he stereotyping? maybe. was he over-exaggerating? quite possibly. was he hypocritical? absolutely not.
[ link to this | view in chronology ]
Also GSM is supported around the world CDMA isn't. I think they were thinking on a global scale when they designed the phone.
[ link to this | view in chronology ]
Re:
The reason the wireless is slow isn't due to its lack of using CDMA though. It's because it didn't use 3G and their response was due to it not being energy efficient. Which could very well be the case and they did say that they will include it in a newer version iphone when they see fit.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
Apple is just as evil as Microsoft. They just cover it up a LOT better. And they look a lot prettier too.
Microsoft is like the ugly version of the devil. Apple is like the hot, sexy female version of the devil. Both will screw you, but part of you don't mind so much with the latter.
[ link to this | view in chronology ]
Re: Re:
hmmm, let's see:
scenario 1: Apple releases the iPhone and you can use it with any of the providers
scenario 2: Apple releases it exclusively for AT&T
yeah, you're right, it's so low of Apple to expect AT&T to pay for that exclusivity and hence compensate for the missed sales Apple would have without the exclusivity agreement
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
60606
www.mp4-converter.net/iphone-converter/iphone-video-converter/
[ link to this | view in chronology ]
iPhone
[ link to this | view in chronology ]