Apple iPhone Sales Provide ‘Profit Monster’ Revenue Opportunities
Apple is the world’s most wealthy company and it owes a disproportional amount of that wealth to the success of its iPhone line of devices.
Asymco examined the profit centers generated around various Apple devices including the company’s iMac, iPad, General Merchandise and iPod options.
What Asymco found was that iPhone sales produce far superior margins, while at the same time outselling their counterparts.
For example Apple iPhone devices tend to reap the benefits of 50% or higher margins (profit per sale), while iPads, Macs and iPods tend to offer 25% to 35% margins. That means in many cases an iPhone, which is cheaper then even the lowest priced iMac, can earn larger profits for the company.
The company’s findings were so impressive for iPhone sales that they call the smartphone a “profit monster” that put Apple’s “gross margins and its operating margins… on a consistent upward slope since early 2006.”
While customers consistently buy Apple devices for the low starting price of $199.99, those devices are sold below cost by wireless carriers. Cellular service company’s make up their loss by tying customers into two-year cellular contracts that consistently charge prices well above international averages for mobile, data and other services.
Two years ago several reports claimed that Apple was manufacturing the iPhone line of devices for just $149 per smartphone. If that manufacturing cost is correct Apple is likely earning hundreds of dollars from the sale of certain higher end iPhone devices. Even if manufacturing is several hundred dollars per smartphone the company is still able to lure in carriers with higher wholesale prices thanks to rabid demand for its products.