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Will Apple really make £426 profit on each iPhone5?
18th September 2012
I love this kind of analysis. It's really done to help inform the investment community who like to get under the skin of the financial performance of public businesses - and there is no bigger business than Apple. But what wonderful material for us business teachers and students too!
I think we have to take this analysis of the potential unit profitability of the new iPhone5 with a pinch of salt. After all, no-one outside of Apple has really got their hands on the new device yet and the components have yet to be disassembled and inspected. However, this analysis by TechInsights still looks pretty credible.
With over 2 million iPhone5s pre-ordered with Apple in the first 24 hours of launch, the new phone looks set to be Apple's most successful launch yet. The iPhone5 includes some reasonably significant changes, including a wider display, more memory and better quality camera - all of which increase the unit costs of each component in the phone. You can see a breakdown of the costs of the iPhone5 here on the TechInsights website.
It is estimated that these improvements have added £21.50 to the cost of building the device.
TechInsights estimates that Apple’s 16GB iPhone 5 costs $167.50 (£103) to make, and with a UK selling price of £529, Apple could be making £426 on every sale of the device in the UK. Over to our students to work out the gross profit margin!