Apple's penchant for quality may have won it strong fan loyalty around the world, but it might wind up doing a number on the profit margin for its forthcoming iPhone, according to an analysis put together by research firm DisplaySearch (no link to the report is yet available):
Austin, Texas-based DisplaySearch has analyzed recent reports stating that Apple will achieve 50 percent gross margin on its recently announced iPhone. DisplaySearch analysis of the product, as demonstrated by Apple at MacWorld, shows that the cost to Apple of the display approaches $60, almost twice that of other estimates due to the 3.5'' 320 X 480 display and the nature of the touch screen technology.
The analysis notes that Apple has long been on the leading edge of display technology and cites the $3,999, 22-inch display that Apple introduced back in 1999. Fast-forward to a product Apple CEO Steve Jobs says will revolutionize the cell phone industry and you've got a lot of focus on making the iPhone's display as revolutionary as the device itself.
"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," DisplaySearch writes. "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."
