getting back on topic, why is only Apple getting these nice margins? the iphone is not that much more than other similar phones and cheaper than the high end blackberries.
It's not only Apple. You really think Nokia's N97 is really worth anywhere near $700 to make? This is more about the phone industry in general and how there is no regulation. These unlocked prices for phones are ridiculous and is close to pure robbery. Computers wouldn't have a chance getting away with these margins. The truth is that the subsidized price of these phones should should be the unlocked price or close to it. I am surprised that no one has gone after the manufacturers and the telcos for this. And I'm surprised that no one on this forum has a problem with the manufacturers having these kind of margins. We may all be Apple fans but I would assume not at the expense of the money in your pocket.
I mean really folks just look at the prices on Touch which is practically the same device minus a handful of chips. Combine that with the likely very aggressive price breaks for ultra high volume orders and you end up with a device that costs pennys to produce.
Well not pennies but you get the idea. How many companies can place an order for advanced flash chips and tie up the suppliers entire production floor? This leads to heavy discounts that are probably more closely guarded at Apple than the Tablet. It is in a way genius that they have so many parts in common across multiple devices. Frankly Nokia doesn't have this good fortune nor the many other cell makers with their broad line of odd products.
Mind you these are estimates too. It wouldn't be to hard to argue for an even larger margin.
After the shutdown of the Sling Box, Google Latitude, and now Google Voice Apps, I don't think the iPhone has as bright of a future as these analysts think. These Apps represent serious features that are going to become major attractions on other platforms
To who? Geeks and techies only care about those. And we are in the minority.
Don't get me wrong, as a geek and a techie I want those But I'll bet it won't make a whits difference to over 80% if not more of the current or potential iPhone customers.
True or False: The cost and profit of a phone is directly proportional to the sum total of the hardware required to build it.
no
AS apple sells tens of millions of iphone/touches all the original R/D and new product start up costs gets spread so thin that its near absolute zero ,
also the economies of scale demand lower and lower component prices
waste also reaches near zero cost. After the 3rd gen ipod touch and ipod-nano phones are released and they mature a bit total tele sales will hit over 200 million on a 8 or 9 phone line up/
getting back on topic, why is only Apple getting these nice margins? the iphone is not that much more than other similar phones and cheaper than the high end blackberries.
Blackberry does get these kind of margins on its high end phones.
After the shutdown of the Sling Box, Google Latitude, and now Google Voice Apps, I don't think the iPhone has as bright of a future as these analysts think. These Apps represent serious features that are going to become major attractions on other platforms because Apple continues to badly cripple the device. If Blackberry, Android, and Pre don't see this opportunity, they either aren't paying attention or don't get it. My guess is that they will and that they will cash in on it.
What is really, REALLY, annoying with comments like the above are self-absorbed, basement dwelling individuals that have way too much time on their hands to "play" with applications that frankly, most people could really care less about.
I'm a systems engineer, geek, power-user and I see more of these apps as a five-minute curiosity than anything else. Children like the above-mentioned will forecast doom-and-gloom because they believe that they represent the majority of users that Apple should be concentrating on when in reality, that is more like <1%.
Most iPhone users (me included) really could care less about time-waster apps like the above. Sure, you yourself may like it but most people have more of a life than to sit down all day and fiddle with things like these. You over-glorify your cause and inject way too much shadow-government conspiracy into this.
If you're really that upset about being denied apps like these, perhaps you should consider some internal reflections and re-prioritize what is important in your life... considering.. you even have one.
I go back to my life now and take comfort in my AAPL.
No, it's not 'pure profit.' Gross margin is just Revenue minus Cost of Goods Sold (or broadly, direct costs). You have to account for Selling, General, and Admin or "SG&A" (broadly, indirect costs) and on top of that, taxes, before you get to 'pure profit.'
No, it's not 'pure profit.' Gross margin is just Revenue minus Cost of Goods Sold (or broadly, direct costs). You have to account for Selling, General, and Admin or "SG&A" (broadly, indirect costs) and on top of that, taxes, before you get to 'pure profit.'
The R&D is not included in gross margin, so it's not pure profit AS BruceP points out. However, he also points out that the R&D and start-up costs are sunk, and have long-ago been expensed, and with more and more units, those costs are spread and approach zero.... Economies of scale.. Well done.. And, variable or direct costs, (COGS) which make up gross margin, are driven down from buyer power via higher volume.
For those who seem to thing that R&D is significant and that if included would drive iPhone margins way down....AAPL is not MSFT or YHOO, hell it's not even GOOG. Apple's R&D is ~3% of total sales, that include expenditures for Mac, iPod ,iPhone, and everything else. So, lop off another 3% if for the sake of argument. Doesn't change the fact that iPhone margins are still above 55%.
Quote:
Originally Posted by brucep
no
AS apple sells tens of millions of iphone/touches all the original R/D and new product start up costs gets spread so thin that its near absolute zero ,
also the economies of scale demand lower and lower component prices
waste also reaches near zero cost. After the 3rd gen ipod touch and ipod-nano phones are released and they mature a bit total tele sales will hit over 200 million on a 8 or 9 phone line up/
For those who seem to thing that R&D is significant and that if included would drive iPhone margins way down....AAPL is not MSFT or YHOO, hell it's not even GOOG. Apple's R&D is ~3% of total sales, that include expenditures for Mac, iPod ,iPhone, and everything else. So, lop off another 3% if for the sake of argument. Doesn't change the fact that iPhone margins are still above 55%.[/QUOTE
HELLO HELLO
THANK YOU
Pure R&D can zap you if your selling or not selling the zune or the xbox type of device ,
No, it's not 'pure profit.' Gross margin is just Revenue minus Cost of Goods Sold (or broadly, direct costs). You have to account for Selling, General, and Admin or "SG&A" (broadly, indirect costs) and on top of that, taxes, before you get to 'pure profit.'
Really ??? Pure profit is a no meaning word. Is there un pure profit ??
And profit is the final number at end of the 1/4 when all expences are accounted for. And you send the bank a large check. It so simple. Apple had 29bn in the bank last 1/4. This 1/4 they have 32bn in the bank .
So the simple figure is found between the 2 > 1/4's .
All the extra jargon is bullshit because the sands are ever shifting.
A new report suggests Apple turns nearly a 60 percent gross profit on the sale of each iPhone, and the device allows the company to lower prices on other products without impacting its bottom line.
Meanwhile, another report released Wednesday says there is a "surprising" move by consumers toward the higher-end iPhone 3GS at $199 and $299, versus the $99 iPhone 3G.
Financial Alchemist
Analyst Turley Muller, on his blog Financial Alchemist, said that with the carrier subsidies, Apple earns well beyond what it spends to build each iPhone. All three models of the phone earn more than 58 percent margins, with the 32GB iPhone 3GS carrying the most profitable 59.6 percent margin.
"Going forward Apple will recognize higher iPhone revenue carrying a higher gross margin," Muller writes. "As iPhone revenue as a percentage or share of total revenue increases, the impact of the higher iPhone (gross margin) on overall (gross margin) will intensify. This will assuage margin pressures Apple faces in other areas."
Muller goes on to suggest that the high profitability of the iPhone has allowed Apple to lower prices on its MacBook Pro lineup without having any effect on the company's earnings.
"As we just witnessed, Apple cut prices on its Mac line-up, and there hasn't appeared to be any noticeable impact on overall (gross margins)," he writes. "Going forward, Apple is guiding Q4 GM to 34%, suggesting GM in the 36%-38% range, thus there doesn't appear that these price reductions will have a dramatic impact on its overall GM."
Fortune Brainstorm Tech believes people should put stock in what Muller says. As the blog points out, he has come within pennies of predicting Apple's earnings per share during recent quarters, while the Wall Street consensus was off by dimes and quarters.
Kaufman Bros.
And in a report released by Kaufman Bros. Wednesday says that the iPhone 3GS, particularly the $299 32GB model, is doing better than expected.
"There were widespread shortages of nearly all 3GS models through the first weeks of July, due to strong preorders and strong demand," the report reads.
Kaufman Bros. had assumed that more customers would lean toward the affordable $99 iPhone 3G model. The firm expects Apple to sell 6.8 million iPhones in the third financial quarter, a 31 percent year over year increase.
But analyst Shaw Wu, who compiled the report, admitted those numbers could be very conservative, as it is a "tough comparison." The firm has raised its target price for Apple to $184 and recommends that investors buy. Kaufman Bros. joins a number of other Wall Street analysts who are high on AAPL stock.
"We continue to believe Apple is positioned to outperform in this tough macroeconomic environment with its defensible strategic and structural advantages and its vertically integrated model," the report reads. "We see several catalysts in the quarters ahead including Snow Leopard, new iPods, new desktop Macs, and a potential new form factor."
Really ??? Pure profit is a no meaning word. Is there un pure profit ??
And profit is the final number at end of the 1/4 when all expences are accounted for. And you send the bank a large check. It so simple. Apple had 29bn in the bank last 1/4. This 1/4 they have 32bn in the bank .
So the simple figure is found between the 2 > 1/4's .
All the extra jargon is bullshit because the sands are ever shifting.
Comments
getting back on topic, why is only Apple getting these nice margins? the iphone is not that much more than other similar phones and cheaper than the high end blackberries.
It's not only Apple. You really think Nokia's N97 is really worth anywhere near $700 to make? This is more about the phone industry in general and how there is no regulation. These unlocked prices for phones are ridiculous and is close to pure robbery. Computers wouldn't have a chance getting away with these margins. The truth is that the subsidized price of these phones should should be the unlocked price or close to it. I am surprised that no one has gone after the manufacturers and the telcos for this. And I'm surprised that no one on this forum has a problem with the manufacturers having these kind of margins. We may all be Apple fans but I would assume not at the expense of the money in your pocket.
Well not pennies but you get the idea. How many companies can place an order for advanced flash chips and tie up the suppliers entire production floor? This leads to heavy discounts that are probably more closely guarded at Apple than the Tablet. It is in a way genius that they have so many parts in common across multiple devices. Frankly Nokia doesn't have this good fortune nor the many other cell makers with their broad line of odd products.
Mind you these are estimates too. It wouldn't be to hard to argue for an even larger margin.
Dave
After the shutdown of the Sling Box, Google Latitude, and now Google Voice Apps, I don't think the iPhone has as bright of a future as these analysts think. These Apps represent serious features that are going to become major attractions on other platforms
To who? Geeks and techies only care about those. And we are in the minority.
Don't get me wrong, as a geek and a techie I want those
Unfortunately
Because as I said, I want those apps too
For one thing, they are not managing supply chains for dozens of different handset models, like some other companies.
So your saying it wouldn't be trivial to make a CDMA iPhone along with a GSM? Apple isn't just being stubborn and torturing CDMA users?
Say it isn't so....
These unlocked prices for phones are ridiculous and is close to pure robbery.
True or False: The cost and profit of a phone is directly proportional to the sum total of the hardware required to build it.
kind of hard NOT to make money when you outsource the manufacturing to a border-line slave labor camp in China!
(I'm kidding
close to the sad truth
True or False: The cost and profit of a phone is directly proportional to the sum total of the hardware required to build it.
no
AS apple sells tens of millions of iphone/touches all the original R/D and new product start up costs gets spread so thin that its near absolute zero ,
also the economies of scale demand lower and lower component prices
waste also reaches near zero cost. After the 3rd gen ipod touch and ipod-nano phones are released and they mature a bit total tele sales will hit over 200 million on a 8 or 9 phone line up/
dick tracey is alive and well
getting back on topic, why is only Apple getting these nice margins? the iphone is not that much more than other similar phones and cheaper than the high end blackberries.
Blackberry does get these kind of margins on its high end phones.
After the shutdown of the Sling Box, Google Latitude, and now Google Voice Apps, I don't think the iPhone has as bright of a future as these analysts think. These Apps represent serious features that are going to become major attractions on other platforms because Apple continues to badly cripple the device. If Blackberry, Android, and Pre don't see this opportunity, they either aren't paying attention or don't get it. My guess is that they will and that they will cash in on it.
What is really, REALLY, annoying with comments like the above are self-absorbed, basement dwelling individuals that have way too much time on their hands to "play" with applications that frankly, most people could really care less about.
I'm a systems engineer, geek, power-user and I see more of these apps as a five-minute curiosity than anything else. Children like the above-mentioned will forecast doom-and-gloom because they believe that they represent the majority of users that Apple should be concentrating on when in reality, that is more like <1%.
Most iPhone users (me included) really could care less about time-waster apps like the above. Sure, you yourself may like it but most people have more of a life than to sit down all day and fiddle with things like these. You over-glorify your cause and inject way too much shadow-government conspiracy into this.
If you're really that upset about being denied apps like these, perhaps you should consider some internal reflections and re-prioritize what is important in your life... considering.. you even have one.
I go back to my life now and take comfort in my AAPL.
No, it's not 'pure profit.' Gross margin is just Revenue minus Cost of Goods Sold (or broadly, direct costs). You have to account for Selling, General, and Admin or "SG&A" (broadly, indirect costs) and on top of that, taxes, before you get to 'pure profit.'
Thanks for the lesson.
Whatever that money is...
My point is that in terms of profitability
One $200 iPhone > Ten x $250 netbooks
C.
No, it's not 'pure profit.' Gross margin is just Revenue minus Cost of Goods Sold (or broadly, direct costs). You have to account for Selling, General, and Admin or "SG&A" (broadly, indirect costs) and on top of that, taxes, before you get to 'pure profit.'
Thanks for the jargon.
The R&D is not included in gross margin, so it's not pure profit AS BruceP points out. However, he also points out that the R&D and start-up costs are sunk, and have long-ago been expensed, and with more and more units, those costs are spread and approach zero.... Economies of scale.. Well done.. And, variable or direct costs, (COGS) which make up gross margin, are driven down from buyer power via higher volume.
For those who seem to thing that R&D is significant and that if included would drive iPhone margins way down....AAPL is not MSFT or YHOO, hell it's not even GOOG. Apple's R&D is ~3% of total sales, that include expenditures for Mac, iPod ,iPhone, and everything else. So, lop off another 3% if for the sake of argument. Doesn't change the fact that iPhone margins are still above 55%.
no
AS apple sells tens of millions of iphone/touches all the original R/D and new product start up costs gets spread so thin that its near absolute zero ,
also the economies of scale demand lower and lower component prices
waste also reaches near zero cost. After the 3rd gen ipod touch and ipod-nano phones are released and they mature a bit total tele sales will hit over 200 million on a 8 or 9 phone line up/
dick tracey is alive and well
For those who seem to thing that R&D is significant and that if included would drive iPhone margins way down....AAPL is not MSFT or YHOO, hell it's not even GOOG. Apple's R&D is ~3% of total sales, that include expenditures for Mac, iPod ,iPhone, and everything else. So, lop off another 3% if for the sake of argument. Doesn't change the fact that iPhone margins are still above 55%.[/QUOTE
HELLO HELLO
THANK YOU
Pure R&D can zap you if your selling or not selling the zune or the xbox type of device ,
No, it's not 'pure profit.' Gross margin is just Revenue minus Cost of Goods Sold (or broadly, direct costs). You have to account for Selling, General, and Admin or "SG&A" (broadly, indirect costs) and on top of that, taxes, before you get to 'pure profit.'
Really ??? Pure profit is a no meaning word. Is there un pure profit ??
And profit is the final number at end of the 1/4 when all expences are accounted for. And you send the bank a large check. It so simple. Apple had 29bn in the bank last 1/4. This 1/4 they have 32bn in the bank .
So the simple figure is found between the 2 > 1/4's .
All the extra jargon is bullshit because the sands are ever shifting.
9
A new report suggests Apple turns nearly a 60 percent gross profit on the sale of each iPhone, and the device allows the company to lower prices on other products without impacting its bottom line.
Meanwhile, another report released Wednesday says there is a "surprising" move by consumers toward the higher-end iPhone 3GS at $199 and $299, versus the $99 iPhone 3G.
Financial Alchemist
Analyst Turley Muller, on his blog Financial Alchemist, said that with the carrier subsidies, Apple earns well beyond what it spends to build each iPhone. All three models of the phone earn more than 58 percent margins, with the 32GB iPhone 3GS carrying the most profitable 59.6 percent margin.
"Going forward Apple will recognize higher iPhone revenue carrying a higher gross margin," Muller writes. "As iPhone revenue as a percentage or share of total revenue increases, the impact of the higher iPhone (gross margin) on overall (gross margin) will intensify. This will assuage margin pressures Apple faces in other areas."
Muller goes on to suggest that the high profitability of the iPhone has allowed Apple to lower prices on its MacBook Pro lineup without having any effect on the company's earnings.
"As we just witnessed, Apple cut prices on its Mac line-up, and there hasn't appeared to be any noticeable impact on overall (gross margins)," he writes. "Going forward, Apple is guiding Q4 GM to 34%, suggesting GM in the 36%-38% range, thus there doesn't appear that these price reductions will have a dramatic impact on its overall GM."
Fortune Brainstorm Tech believes people should put stock in what Muller says. As the blog points out, he has come within pennies of predicting Apple's earnings per share during recent quarters, while the Wall Street consensus was off by dimes and quarters.
Kaufman Bros.
And in a report released by Kaufman Bros. Wednesday says that the iPhone 3GS, particularly the $299 32GB model, is doing better than expected.
"There were widespread shortages of nearly all 3GS models through the first weeks of July, due to strong preorders and strong demand," the report reads.
Kaufman Bros. had assumed that more customers would lean toward the affordable $99 iPhone 3G model. The firm expects Apple to sell 6.8 million iPhones in the third financial quarter, a 31 percent year over year increase.
But analyst Shaw Wu, who compiled the report, admitted those numbers could be very conservative, as it is a "tough comparison." The firm has raised its target price for Apple to $184 and recommends that investors buy. Kaufman Bros. joins a number of other Wall Street analysts who are high on AAPL stock.
"We continue to believe Apple is positioned to outperform in this tough macroeconomic environment with its defensible strategic and structural advantages and its vertically integrated model," the report reads. "We see several catalysts in the quarters ahead including Snow Leopard, new iPods, new desktop Macs, and a potential new form factor."
[ View this article at AppleInsider.com ]
Wonderful news. " potential new form factor " . Tablet?
Really ??? Pure profit is a no meaning word. Is there un pure profit ??
And profit is the final number at end of the 1/4 when all expences are accounted for. And you send the bank a large check. It so simple. Apple had 29bn in the bank last 1/4. This 1/4 they have 32bn in the bank .
So the simple figure is found between the 2 > 1/4's .
All the extra jargon is bullshit because the sands are ever shifting.
9
+1! His user name should be Mr Jargon.