Apple's iPhone offers slightly over 50 per cent gross margins, according to market researcher iSuppli — though the researchers haven't had an iPhone to tear down for the analysis.
Users don't have to worry too much, however, because iSuppli believes Apple will reduce iPhone prices to compete against other handset makers.
The gross margin, or the mark-up over the cost of making the device, on the 4GB version of the iPhone will be nearly 51 per cent, iSuppli said on Thursday. The handset is expected to retail for $499, but the cost of components and assembly are less than half that price: $229.85.
The premium 8GB version of the iPhone will cost about $264.85 to make, but sell in stores for $599, for a 53.1 per cent gross margin, iSuppli said.
Over time, Apple will be able to increase its profits, or lower the price tag, as it ramps up production of the iPhone, iSuppli said. In general, once sales of a hot new product start rising, a company such as Apple will increase orders, and component suppliers will reduce their price per part to win those larger orders.
It's important to note that iSuppli did not actually have an iPhone to tear apart for its cost analysis. The price and profit figures are estimates based on the features Apple has announced for the handset. "iSuppli has a high degree of confidence in its conclusions," it said in the report.
Apple could not be reached for comment on the iSuppli report.
The price tag on the iPhone may have to come down to attract users anyway, iSuppli said, because it will be competing with 835 other music phone models expected to be launched this year.
There are already 14 well-featured music-enabled mobile phones shipping from companies including Nokia, Motorola and Samsung Electronics, the market researcher said.