Bad news for Apple. Although a deal with China Mobile to get the iPhone available to the biggest untapped mobile market in the world will be nice, their margins are going to be as thin as the skin on their teeth. China Mobile spokesperson Rainie Lei:
“Apple is no longer insisting on a revenue-sharing policy, so the biggest hurdle for China Mobile to bring in the iPhone has been cleared”
Uh-ohs! Without a few bucks a month from the subscriptions, Apple is going to be hurting for profits over there. It’s going to suck up their production and they’re going to get very little in return — aside from the considerable fact that they’ll be a major brand in China. It’s a risky venture, but when the alternative is another phonemaker getting the contract, it may be the lesser of two evils.
WOW! You really have no idea what you’re talking about, do you??? The projected margins for the #G iPhone are expected toe GREATER than the old phone. iSupply projects costs to be no more than $174 per 8gig phone initially ($204 for the 16gig). The phone is dropping it’s rev sharing plan but carriers are SUBSIDIZING it’s price. You are aware how this works, correct? Service provider buys phone from Apple @ $399 per 8gig phone, sells it to you for $199. Provider eats the $200 and makes it back in spades on the call plan and high data usage that iPhone users are documented to use. Apple is making $224 gross profit on the phone (8gig) or a 54% MARGIN!
Who gave this idiot a job writing?????
btw – while these numbers are all subject to final tear down numbers but have been well documented by professionals. Try a Google search, all the kids rave about it.
That guy is right. Apple isn’t revenue sharing with any one anymore including AT&T. There margins are still high because they will be getting the full price from the phone by subsidizing it with the carriers.
If they’re lowering the price of the phone to encourage adoption and make it more attractive to both carriers and phone buyers, their margins are going to be smaller than what they were. I never said they weren’t going to make any money at all on the things, but if they’re expanding the market and removing revenue sharing from their income stream, they’re relying entirely on hardware money and halving their profit.
They’re essentially throwing away half of their income on the iphone to drive adoption – it’s a sacrifice play and it reduces their overall cash if it doesn’t play out the way they want it to.
Have you even read any of the other articles on TechCrunch about the iPhone’s profitability? There are NUMEROUS articles all over the tubes on how much the subsidies are and how the BOM is less than the original iPhone. Apple is getting the $ upfront now with most carriers (it will have rev sharing with others) and for whatever accounting reasons will spread the vig through the year.
Please show me “halving” of their profit. I’d love to see the 50% loss in revenue so I could confidently go out and short AAPL.
Look, I don’t care one way or another whether someone is pro or con Apple (I own an HP and Apple products), just do your homework. This article screams of uneducated guesses.
Here, I’ll help…
http://www.crunchgear.com/2008/06/25/3g-iphone-is-still-profitable-at-199/
http://www.crunchgear.com/2008/06/24/iphone-3g-might-actually-cost-173-says-isuppli/
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/18/AR2007011801457.html
http://seekingalpha.com/article/82013-at-t-iphone-subsidy-is-325-oppenheimer
Debate on how much apple will gain don’t make much sense…what the other cell phone makers will respond to it? Could there begin another smart phone war? Iphove VS Nokia or Iphone Vs Google
nice thanks
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