Credit Suisse analysts have estimated that Apple is making a smaller margin on the iPhone 6 than on any previous model – but predicts that the impact will be offset by year-on-year revenue growth of 14 percent, reports Quartz.
The iPhone 6 costs Apple $350.60 to produce, all in. Apple typically receives $599 on the retail price of $649, leaving it with $248.40 in gross profit. That’s 41.5%. Still very healthy, but not at the levels of previous models.
In contrast, the iPhone 5s left Apple with $274.30, giving it a 45.8% margin. The two-year-old iPhone 5 gave Apple $293.70 per unit, or 49% …
The reduced margin is attributed to Apple holding the retail price constant while spending more on components – most notably the larger displays.
However, say the analysts, the introduction of the more expensive iPhone 6 Plus pushes up the average selling price – and the company estimates that increased demand for the new models will lead to 14 percent growth in year-on-year revenue.
Apple announced a record 4 million preorders for the iPhone 6 in the first 24 hours, with the new models seeing rave reviews. Foxconn is said to be struggling to keep up with demand, despite manufacturing more than half a million iPhones per day.
Via GforGames
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Because the higher storage model will be more common?
It might be more than 14% growth. The most expensive iPhone of all time (6+ 128 GB) seems to be among the most popular.
I mean if they said how much the 6+ 128GB Costs, then it may explain why Apple will give zero fucks about this chart.
Credit Suisse looking for some publicity ….. entering the speculation and guessing game. I don’t put any credence whatsoever on their numbers.
Just remember folks, before a flame war stats, Gross Profit is before Apple pays all of its own bills (think R&D, engineering, overhead, lights, property taxes, etc). NET Profit is what Apple can effectively put into the bank, and that will be lower than 41.5%.
Why should anyone one believe what Credit Suisse analyst says over any other analyst? They’re not privy to any of Apple’s precise costs for components. Why does Apple have so many different gauntlets to acquire value while other companies do not. You rarely hear the breakdown of component costs for other smartphone companies. I’d definitely like to see how Xiaomi is able to undercut Samsung and what it’s left with per smartphone after that. It’s so easily excepted by analysts that Xiaomi is somehow creating miracles to increase market share but it doesn’t work like that. The bills have to be paid by every company and everyone pays the same basic bills which is mainly component costs and assembly costs and either one or the other suffers when one tries to undercut rivals.
I’ll really be glad when Apple can find some decent non-hardware revenue streams to somewhat offset iPhone margins. Revenue coming from another area would effectively take the pressure off iPhone profit margins. Apple is under far too much scrutiny. Has anyone said much about the doubtful success of Amazon’s Fire Phone? Nothing much about poor smartphone profit margins or telling anyone to sell Amazon due to its smartphone incompetency.