Great Debate 11am ET/8am PT Apple, Congress face off over taxes: Cook testifying

Topic: iPhone

Apple makes big bucks profit per iPhone 3G S

Summary: Following an iSuppli teardown, it is revealed that Apple makes over $400 profit on every 16GB iPhone 3G S, and a whopping $500 on every 32GB iPhone 3G S. It's not so much iPhone 3G S as iPhone 3G $$$!

Adrian Kingsley-Hughes

By for Hardware 2.0 |

Following an iSuppli teardown, it is revealed that Apple makes over $400 profit on every 16GB iPhone 3G S, and a whopping $500 on every 32GB iPhone 3G S. It's not so much iPhone 3G S as iPhone 3G $$$!

Yep, you read that right. After factoring in component costs and even manufacturing costs, Apple still gets change from $200.

Here's the cost of components breakdown as carried out by iSuppli:

Now, once you've absorbed that, consider that Apple sells 16GB iPhone 3G S handsets to AT&T for around $600. Customers might not pay the full price all in one go (if you're a new customer, you can pick up the iPhone at a reduced price), but over the course of the two years you can rest assured that they do pay $600 for the handset.

Remember that the shipping, advertising, R&D and so on eat into that profit per handset, but even with these variables factored in, Apple is pulling in a tidy profit per handset.

The iPhone 3G S could be the recession-busting pill that Apple was looking for.

Topics: iPhone, Apple, Hardware, Mobility

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

52 comments
Log in or register to join the discussion

  • You forgot a component

    Apple Logo = $421.04
    T1Oracle
    Reply Vote

  • Medialets Sunspider Tests: iPhone 3GS 3x faster than Pre, 5x faster than G1

    In Medialets controlled tests on Javascript execution using
    Sunspider (test suit provided by Webkit) it found that the
    iPhone 3GS was significantly faster than its rivals.

    The Pre was only as fast as the old G1 running 3.0.

    (might have to copy entire link for it to work)
    http://www.medialets.com/blog/2009/06/24/speed-test-
    iphone-3gs-even-faster-than-apple-claims/
    Davewrite
    Reply Vote

    • Rumor is iPhone 3GS using faster SGX535 chip?

      The iPhone 3GS uses the latest PowerVR SGX graphics processors

      but is it the slower SGX530 or the faster SGX535?

      SGX535 and SGX540 (28 MPolys/s) for handheld high end mobile,
      portable, MID, UMPC, consumer, and automotive devices

      The Pre uses the SGX530
      SGX530/1 (14 MPolys/s) for the handheld mobile market


      some clues and rumors:

      (copy entire link for it to work)
      http://www.macrumors.com/2009/06/25/iphone-3gs-has-more-
      powerful-powervr-sgx-535-gpu/
      Davewrite
      Reply Vote

      • And this justifies...

        ...the huge mark up because...?

        :)
        Sleeper Service
        Reply Vote

        • never said it justified anything

          this article is under ZDnet's Hardware section which is usually read by
          techie geeks.

          it deals with detail teardown of components (chips) etc.

          just thought readers (those techie geeks) might be interested in what
          those components could do.

          (I believe there were also articles of Pre, G1 tear downs in other blogs)

          I think my post is relevant to the article.

          never said it justifies anything. Even made sure I stated the faster
          graphics chip was a 'rumor'.

          thing is for those beating up on Apple are phones with similar or
          worse specs like the Pre better priced?

          :)

          Davewrite
          Reply Vote

        • Defending Apple (lost my mind)

          I think Apple has the right to charge whatever it can get away with. $500 is outrageous, but if people are willing to pay, why not. It is not as if they are ripping off mothers buying milk for their children.

          The Apple markup/pricing is however a major reason why I personally do not buy Apple products. Why on earth would I hand Steve Jobs $500. I need it a lot more than he does. End of story.
          Economister
          Reply Vote

          • Are other phones with similar or worse specs like Palm Pre better priced?

            think apple gouging?

            are the other smart phone manufacturers like so much better than the
            iphone?

            Example Palm.

            Palm has about the same guts as the iPhone or worse if rumors of
            faster iPhone chips are true.

            Palm Pre 299 (with 100 rebate) 8 g storage

            iPhone 3GS 199 16g storage.

            Davewrite
            Reply Vote

          • According to iSuppli...

            the Palm Pre costs $138 in parts.

            As always, the iSuppli numbers do not include R&D, manufacturing,
            marketing, shipping or packaging.

            [u]http://www.intomobile.com/2009/04/29/isuppli-palm-pre-costs-
            138-in-parts.html[/u]

            msalzberg
            Reply Vote

          • Apple's Markup Also Includes FREE OS updates. -nt

            nt
            Davewrite
            Reply Vote

        • You want markups... Look at Windows.

          What? $0.75 to press/verify the disk, $1.20 publication and packaging, $3.00 S/H.

          Cost? $300???
          Bruizer
          Reply Vote

  • In a related story

    Adrian Kingsley-Hughes makes a huge profit. Tabulating the
    costs of electricity used in writing a typical blog entry at
    about $.35, Kingsley-Hughes makes a whopping 14,000%
    profit on every article he writes.

    He generates an even higher profit when writing class envy
    articles to drive hits to his site.
    frgough
    Reply Vote

    • Silly (nt)

      nt
      Economister
      Reply Vote

      • Not at all

        It's precisely the same model Adrian used to determine profit on the
        iPhone. Just an itemized list of durables vs. retail selling price.

        It's economically juvenile. I suggest we do a cost breakdown on ZDNet's
        profit, eliminating all costs associated with the business except the
        durable goods in their server room. After all, Adrian doesn't really need
        to draw a salary, does he, now?
        frgough
        Reply Vote

        • Yes, silly

          "Remember that the shipping, advertising, R&D and so on eat into that profit per handset, but even with these variables factored in, Apple is pulling in a tidy profit per handset."

          If you read the blog, that pretty much covers it. I am not interested in splitting hairs.

          So yes, your post was silly.
          Economister
          Reply Vote

    • Does that go for Windows 7 pricing too?

      Just curious: If a markup/price iPhone acceptable because it is what the market is willing to pay, then that same logic should extend to Windows 7 pricing, also.

      Correct?
      GuidingLight
      Reply Vote

      • 100% Correct.

        The thought that price of a product is tied only to manfacturing cost is looney.
        Bruizer
        Reply Vote

  • In a really related story about Apple:

    A blog a few days ago discussed the privacy vs disclosure issues related to Jobs' absence/surgery.
    It is interesting to note that Nick Farrell writing for The Inquirer reports that none other than Warren Buffet has weighed in on the issue suggesting that the matter was material and should therefore have been disclosed, with which I agree.

    The link is here:

    http://www.theinquirer.net/inquirer/news/1406094/major-investor-fumes-apple
    Economister
    Reply Vote

    • FAIL

      This is not related to the iPhone. You couldn't have posted this to any of the 5 ZDNET articles that actually ARE about this very issue?

      There is already a very active debate going on here about this issue. Learn to use a search bar and then post where it belongs, please.
      use_what_works_4_U
      Reply Vote

  • just part of the cell phone ripoff ecosystem

    ALL cell phones are ridiculously marked up. Those little flip phones that are 199 without a plan? Blackberries at 5-600 without a plan? Apple might have a little higher margin, but they aren't unique in this.
    gtvr
    Reply Vote

  • Isn't one of the signs of a monopoly price gouging?

    Just sayin'... (laughing)
    wolf_z
    Reply Vote
CNET Join | Log In | Privacy | Cookies Close