Apple iPhone to Generate Nearly 50 Percent Margin

Apple iPhone to Generate Nearly 50 Percent Margin

January 19, 2007

    EL SEGUNDO, Calif., Jan. 19 /Xinhua-PRNewswire/ -- Each
Apple iPhone sold will generate nearly a 50 percent gross
margin for Apple Inc. and partner Cingular Wireless, giving
the companies a hefty profit, as well as plenty of room for
future price cuts, according to a preliminary functional
Bill of Materials (BoM) estimate created by iSuppli Corp.

    "iSuppli estimates the 4Gbyte version of the Apple
iPhone will carry a $229.85 hardware BoM and manufacturing
cost and a $245.83 total expense, yielding a 49.3 percent
margin on each unit sold at the $499 retail price,"
said Andrew Rassweiler, teardown services manager and
senior analyst for iSuppli.  "Meanwhile, the 8GByte
Apple iPhone will sport a $264.85 hardware cost and a
$280.83 total expense, amounting to a 46.9 percent margin
at the $599 retail price."

    While iSuppli has a high degree of confidence in its
conclusions, these figures are considered preliminary until
we perform an actual physical teardown and analysis of the
Apple iPhone.  For Apple, such a strong hardware profit is
par for the course, with the company having achieved
margins of 45 percent and more in products including the
iMac and iPod nano, according to iSuppli.  However, because
Apple is facing extensive competition in the music-phone
market, the company may need to cut into its margins to
reduce pricing in the future.

    "With a 50 percent gross margin, Apple is setting
itself up for aggressive price declines going
forward," said Jagdish Rebello, PhD, director and
principal analyst with iSuppli.

    iSuppli developed its preliminary functional BoM
estimate based on an analysis of the capacity and features
of the Apple iPhone, combined with information from
materials from Apple, company sources and third-party
publications.  To further help determine the content of the
Apple iPhone, iSuppli leveraged the extensive knowledge of
its Teardown Analysis service.

    iSuppli also employed data from its Mobile Handset Cost
Model and Design Forecast Tool.  This estimate differs from
iSuppli's typical teardown analysis of electronic
equipment.  iSuppli's teardowns involve the actual physical
dissection of electronic equipment in order to make
first-hand observations of equipment content and design.

    For a full version of this release, including figures
illustrating issues discussed in this release, please
visit:
http://www.isuppli.com/news/default.asp?id=7308&m=1&y=2007
. 

    All Information and Intellectual Property Contained
Herein is the Sole Property of iSuppli Corporation

    About iSuppli Corporation 

    iSuppli Corporation is the global leader in technology
value chain research and advisory services.  iSuppli
provides market intelligence services for the EMS, OEM and
supplier communities in addition to servicing consumer
electronics and media concerns.  Services afforded by
iSuppli range from electronic component research to
device-specific application market forecasts, from teardown
analysis to consumer electronics and from display device and
systems research to multimedia content and services. More
information is available at http://www.isuppli.com .



    For more information, please contact:

     Jonathan Cassell, 
     Editorial Director and Manager, 
     Public Relations of iSuppli Corporation
     Tel:    [phone]
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SOURCE  iSuppli Corporation