“Analysts are beginning to question earlier reported Bill of Materials costs on Apple’s iPhone and are suggesting that the gross margins Apple will achieve may be much lower than predicted, and nearer the mid to high 20 percent range than the estimated 50 percent. In particular, there are debates about the cost of the display and related touch screen technology,” John Walko reports for EE Times Europe.
Walko repots, “For instance , DisplaySearch (Austin, TX.) suggests the cost to Apple of the display approaches $60, almost twice that of other estimates due to the 3.5-in 320 – 480 display and the nature of the touch screen technology. According to DisplaySearch Apple has followed its normal trend of eschewing the use of off-the-shelf displays for its innovative designs. The market research group stresses the narrow bezel around the display, as well as the thinness of the device, indicate that a standard display product would not meet Apple’s aggressive design requirements.”
Walko repots, “John Jacobs, Director of Notebook Market Research at the company, notes that Steve Jobs, in his keynote address at MacWorld, said Apple has filed for more than 200 patents for technologies in the iPhone. ‘Such innovation does not occur without cost. Although Apple and its key component suppliers may choose to amortize the cost of these advanced technologies over a large number of units, our analysis indicates that Apple’s BOM (bill of materials) cost, including integration, is well above $300 for the 4 GB model. After the costs associated with building, shipping, marketing and selling the iPhone are included, we expect that margins will be closer to Apple’s typical mid to high 20 percent range.'”
Full article here.
Related article:
Apple to see near 50% gross margin on each iPhone sale? – January 18, 2007
