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January 26, 2007
iPhone Margins Less Than Half Original Estimates
I scoffed some time ago at the supposed 50% margins iSuppli suggested for Apple's upcoming iPhone. I now have a fellow scoffer in my corner, DisplaySearch, which is saying today that the cost to Apple of the TFT display probably approaches $60, almost twice what iSuppli pegged it at.The upshot: DisplaySearch estimates that, all-in, Apple's iPhone margins are going to be closer to the company's typical high-20% range, nowhere near where iSuppli had it.
[DisplaySearch via Eric Savitz]
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And that 20% margin would be the case if the phone was available today. By the time it comes out there will be even more competetion - forcing lower prices and consequent margin compression. Apple will discover that cell phone market is a lot harder than they thought it would be. And with declining iPod and Mac sales and margins and with Jobs under seige - 2007 will not be a happy year for them.
And that 20% margin would be the case if the phone was available today. By the time it comes out there will be even more competetion - forcing lower prices and consequent margin compression. Apple will discover that cell phone market is a lot harder than they thought it would be. And with declining iPod and Mac sales and margins and with Jobs under seige - 2007 will not be a happy year for them.