How many $$$s does Apple make from an iPhone?

Number crunching with Apple


Apple's figures came out on Tuesday, revealing that all is going well in Cupertino, but analysts crawling over the details are trying to work out if they reveal anything else besides - such as the revenue cut Apple is getting from every iPhone in use.

The details of the deal Apple did with AT&T, and more recently with O2, T-Mobile and Orange in Europe, are under held under the greatest secrecy, so of course everyone wants to know. We all know that the iPhone is sold at a profit, and that a percentage of subscription revenue goes to Apple for every iPhone user, but getting to the actual figures isn't easy.

iSuppli did a great job pricing up all the bits of an 8GB iPhone at $265. It's been accurate in the past, so we've no reason to dispute its figure, which puts the income from every iPhone sold at $134.

Then there's the Apple cut from the subscription charged by the operator.

We nailed our colours to the $3/$11 amount, for repeat/new subscribers respectively, calculated by analyst Gene Munster back in July. But based on Tuesday's figures Mr Munster has upped his estimate to $18 per subscriber. If true, that's $432 per customer over the two year contract, dwarfing the profit Apple makes on the hardware.

Given 1.8 million iPhones, Apple's due almost $800m over the next two years, after taking $240m on the hardware.

This goes a long way towards explaining why Apple is so keen to stop punters unlocking their handsets. Unlocked handsets don't bring in subscription revenue, though, of course, $240m isn't to be sniffed at it.

Not everyone agrees with Mr Munster's new figures. Richard Gardner from Citibank has examined the same statements from Apple and came up with $12 a month, and based on what we've heard we're sticking to the $3/$11 estimate.

Either way, it's clear that Apple has started the transition from a company selling a product to a company selling a service, while Nokia and Microsoft can only look on jealously as their own plans in that direction continue to flounder. ®

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