iSuppli conducted a tear-research of 8 gigabyte iPhone that costs $599 to find out production costs of the phone. Manufacturing costs were estimated to be about $265.83 per unit that makes more than 55 percent margins.
Here are the major components of the phone with their costs accordingly:
* Digital baseband, Radio Transceiver, Power Management (by Infineon) - $15.25
* Display/graphics connecting chip (by National Semiconductor) - $1.50
* Touch screen module (by Balda AG) - $27.00
* Touch screen display (by Epson/Sharp/Toshiba Matsushita) - $24.50
* Applications processor, NAND flash memory, DRAM chip (by Samsung Electronics) - $76.25
* Audio codec (by Wolfson Microelectronics Plc) - N/A
* Bluetooth chip (by CSR Plc) - $1.90
* Wi-Fi chip (by Marvell Technology Group) - $6.00
Since its release on June 29 Apple sold out all the smart phones at its 164 stores and at AT&T’s 1800 stores, and only a very small amount of iPhones are still available for sale. This is a very good start, but the company still has lots of devices to sell to cover all development expenses. Besides manufacturing costs, the company also had huge marketing and research costs to find out what the customers want.
Comparing iPhone’s price and margins with its rival mobile phones, iSuppli estimated that Apple is going to have huge profit. iPhone costs three times as much as Motorola’s Q, it’s the the most expensive smart phone. About the margins, mobile market has never seen such a percentage ever: the highest margins are Palm’s - 38.2 percent and Motorola's - 30 percent.
iSuppli has estimated that Apple will sell about sell 4.5 million iPhones and about 30 million phones by 2011. Steve Jobs estimated they’ll sell about 10 million units by 2008, taking 1 percent of mobile phone market. by Ruzan Harutyunyan for HULIQ
