The margin of an “i” in the phone

Apple has always been the king of hype. It’s no myth that the iPod is the best example of a well-marketed product. But when Apple announced a phone device a few months ago, capable of multimedia and Internet, it was seen with as much anticipation. The hype around the iPhone was built mainly through the electronic media, at a point in time when the product was not even in production. And, finally, when the iPhone was launched last week, it was an instant hit. 500,000 iPhones were sold this weekend alone. iPhone is not entirely one of its kind, but everyone wants to put an “i” in their phone.

iPhone

Apple has always been tight-lipped about the technology, the partners, and the processes around bringing the iPhone to life. However, one recent analysis estimates that this new smartphone costs Apple a mere $220 to make. It estimates that the cost of the materials used in the iPhone add up to about $200 for the 4-gigabyte version, which sells for $499, and about $220 for the 8-gigabyte version, which sells for $599. That’s a 50% profit margin on each piece! The most expensive component on the phone is its touch screen, at an estimated cost of $60 per unit.

Considering the overwhelming response that the iPhone has received, it looks like another success story for Apple. Without doubt, Steve Jobs has changed the face of Apple.

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