Apple iPhone margins 'over 50 per cent'

Margins of 50 per cent are fairly standard for Apple

Apple stands to make a profit of more than 50 per cent on each iPhone it sells, according to analysts.  

Research firm iSuppli said that at $500, the 4GB iPhone will create a profit of 50.7 per cent, and the $600 8GB model will return the company a 53.1 per cent profit over manufacturing costs. 

ISuppli estimated that after hardware, software, manufacturing and licensing costs, Apple is paying $245.83 and $280.83 for the 4GB and 8GB devices respectively.

Dr Jagdish Rebello, director and principal analyst at iSuppli, claimed that the margins are fairly standard for Apple, and that it makes similar percentages on iPod and iMac sales.

The introduction of a much-coveted device at a high profit margin is simply a case of "Apple being Apple", Dr Rebello told vnunet.com. 

But this level of mark-up is not normal in the mobile phone industry, according to iSuppli. The firm estimates that at least 835 different mobile devices will be introduced in 2007, mostly at mark-ups of between 12 and 13 per cent.

"The cellular phone business is brutal in terms of the competition and life span of the market, and prices drop very fast," said Dr Rebello.

The analyst predicts a similar price drop for the iPhone, although it may not come until well after the rabid Mac fans and early adopters have paid top-dollar for the much-anticipated device.

"I think Apple will ride the initial hype before it drops the prices, around or after the holiday season," said Dr Rebello.

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