Apple has managed to eliminate the price premium while maintaining its profit margins
Click to enlarge. Source: Deutsche Bank
"We expect customers who do the math to opt for the iPhone," writes Deutsche Bank's Chris Whitmore in a note to clients Monday.
Moreover, he adds, so will customers who don't do the math.
Whitmore's analysis involves comparing the price, features and total cost of ownership of the refreshed iPhone 4S with its leading competitors.
At $199 with a two-year contract (and $649 unlocked), the iPhone 4S is roughly the same price as the 3G handsets that run Google's (GOOG) Android OS, and an average of about $60 less than 4G-based phones such as the Samsung Galaxy S 11 ($229 with contract), Droid Bionic ($299) and HTC Thunderbolt ($249).
And total cost of ownership for a 16 GB iPhone 4S, amortized across 24 months, is about $93 per month (450 min, unlimited text and 2GB data plan), roughly comparable to the other smartphones.
Moreover, because Apple (AAPL) is able to command higher subsidies from its carrier partners (about $450 for the iPhone 4 and 4S) Whitmore estimates that the company is making more money per sale than any of its competitors, as indicated by the chart above.
With an estimated bill of materials between $170 to $220, depending on capacity, the manufacturing margins on the iPhone 4S are roughly 71-73%.
That, Whitmore concludes, "should support attractive corporate margins for AAPL for multiple quarters."
Below: Deutsche Bank's chart comparing purchase costs and monthly total cost over the course of a two year contract.
According to NPD, a quarter of all smarphones are now four inches and above.
T-Mobile Comet, left, Sprint EVO, Right
A report today from NPD shows that the face of the smartphone industry is changing, for the bigger. "The explosion in Web and video content available for smartphones has caused consumers to rethink their phones' sizes," said Ross Rubin, executive director of industry analysis for NPD. "Larger displays offer a richer MORE
Seth Weintraub - Mar 21, 2011 2:07 PM ET
The New Android Sideick
This time it is a Samsung Galaxy S under the hood.
Before the iPhone was released in mid 2007, I had been a Sidekick user for three or four years. I did jump to the iPhone but I never regained my typing and multi-task speed, even with the best Androids/iPhones out there today.
The Sidekick, as you probably know, was a specialized early smartphone that was widely marketed to MORE
Seth Weintraub - Mar 15, 2011 12:25 AM ETEvery morning, discover the companies, deals and trends in tech that are moving markets and making headlines. SUBSCRIBE
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| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.95 | -0.16 | -1.97% |
| Microsoft Corp | 31.27 | -0.17 | -0.54% |
| Ford Motor Co | 12.28 | -0.25 | -2.00% |
| General Electric Co | 19.39 | 0.17 | 0.88% |
| Citigroup Inc | 32.36 | -1.00 | -3.00% |
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,938.67 | -27.02 | -0.21% |
| Nasdaq | 2,933.17 | -15.40 | -0.52% |
| S&P 500 | 1,357.66 | -4.55 | -0.33% |
| Treasuries | 2.00 | -0.04 | -1.96% |
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