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.