And re-sold it to consumers for billions more than it paid, according to Toni Sacconaghi
The only difference between a 16 GB iPhone 4S and the 32 GB model is 16 GB of NAND flash memory, for which Apple (AAPL) charges customers $100.
But according to Bernstein Research's Toni Sacconaghi, Apple buys that memory for a heavily discounted price of $0.67 per gigabyte, or a total $10.72.
That's a pretty sweet mark-up. And an extraordinarily profitable strategy, Sacconaghi writes in a note to clients entitled "Apple: The NAND Gravy Train."
It's such a sweet deal, he can't understand why Apple's competitors aren't doing the same. I quote:
Apple earned an estimated $2.2B+ in operating profits in CQ411 – at 78% gross margins – purely from upselling consumers to products with more NAND storage beyond Apple's base configuration models. Moreover, a majority of these profits came from iPhones yet no other handset OEM has emulated this strategy...
Ironically, Apple earns nearly twice as much from reselling NAND than all the NAND suppliers combined, with NAND resale responsible for 20% of Apple's total operating profits last quarter, at an annual run-rate of $10B+.
By comparison, Google (GOOG) Android phones such as the Samsung Galaxy S2 come with a single pre-specified amount of internal storage (32GB in this case) and offer users the option to add an external SD card. Good for users, not so good for Samsung's bottom line.
Below: One of Sacconaghi's spreadsheets.
The Galaxy Nexus "Calling all pretty faces" is an homage to Apple in more ways than one
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There was some confusion in the tech press last Saturday when Bloomberg reported that Samsung had quietly dropped a countersuit filed in California in response to Apple's (AAPL) charge last April that Samsung had "slavishly" copied Apple's iPhone.
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Last fall, Asymco's Horace Dediu introduced a new way of visualizing the dynamics of the worldwide mobile phone market.
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Samsung's countersuits were "swift and strong" says an expert
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"Samsung has mounted a swift and strong response to Apple's initiative," writes Foss Patent's Florian Mueller. "The speed with which Samsung responded to Apple's lawsuit in four different jurisdictions (in three of them MOREPhilip Elmer-DeWitt - Apr 29, 2011 10:19 AM ET
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