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If you believe that they make $200 per iPhone and have sold 35M iPhones, that'd be about 7 billion in earnings. It's a bit weird because they take the earnings
by sama 17y ago
If you believe that they make $200 per iPhone and have sold 35M iPhones, that'd be about 7 billion in earnings. It's a bit weird because they take the earnings over 2 years per device (or something close to that). Most estimates on profit per song sold are around 10 cents (http://www.appleinsider.com/articles/07/04/23/itunes_store_a_greater_cash_crop_than_apple_implies.html http://www.appleinsider.com/articles/07/04/23/itunes_store_a...), and they'd sold 6 billion songs by the beginning of this year. App Store sales are probably not significant here, although they're critical to why they sell so much hardware. I've read stuff that earnings to Apple are less than 100M.
So, say 7B for iPhone (alone, not counting iPods!!) earnings and 700M for iTunes.
EDIT: several people have suggested to me that in fact Apple makes closer to 400 than 200 per iPhone when you take into account revenue shares and all subsidies. strikes me as high.
- brk 17y ago* It's a bit weird because they take the earnings over 2 years per device* That's not really weird, it's standard accounting. iPhone sales are linked to two year contracts. The sale isn't "complete" legally until all contractual obligations are satisfied, thus the deferred revenue recognition. I had a sales person give 2 extra "free" years of hardware warranty, which in short caused that revenue recognition to be deferred until all contract obligations were met.
- lionhearted 17y agoFascinating - do you know if it's possible/feasible to do this if you're doing projects and contract work? Any ideas on what kind of view is taken of offering some long term support/warranty/guarantee and taking your earnings over two years? Any articles or insight would be very much appreciated.
- mediaman 17y agoUsually you just create a warranty liability reserve account for that. It should not affect your revenue recognition.
- rms 17y agohttp://www.macworld.com/article/141886/2009/07/att_subsidy.html http://www.macworld.com/article/141886/2009/07/att_subsidy.h... This says the subsidy is $300 per iPhone and that makes more sense to me than $200 per iPhone.
- rms 17y agoI don't think $400 per cell phone is necessarily high. A huge portion of cell phone payments go to pay commissions to various people up and down the line. I have no hard data about this, but I sold cell phones at Radioshack for a while, and the generally accepted wisdom was that it took 12 months of a 2 year contract to pay off all of the various commissions.