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Apple

Apple’s iPhone Prices Soar, but Not Profit Margins

The enormous profits Apple generates from its iPhone business are legendary. Even though they account for less than 20% of all smartphone shipments, iPhones capture 87% of the entire market's profits, according to estimates from Canaccord Genuity.

But what’s less understood is that as iPhones have increased in hardware complexity, the gross profit margins on Apple smartphones have actually gone down over the past decade, from a high of nearly 74% to around 60% for most of the latest entry-level models, according to an analysis of iPhone component costs provided by TechInsights, a firm that analyzes hardware costs. That is true even as Apple has pushed the price of its smartphones to new altitudes, starting with the $999 iPhone X in 2017.

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‘Apple is trying to pack more and more into a phone,’ said Al Cowsky, a manager of costing analysis at TechInsights.