Analysts see 50 percent margins for iPhone

/ Source: The Associated Press

Apple Inc. will have plenty of room to eventually reduce the retail price of its upcoming iPhone, according to preliminary gross margin estimates by a market research company.

The iPhone, the combination cell phone-iPod media player that Apple unveiled last week, will yield gross margins of more than 50 percent at the current set of retail prices, iSuppli Corp. said in an analysis of presumed component and manufacturing costs.

The 4-gigabyte version of the iPhone, with a retail price of $499, will cost Apple $245.83 to make, iSuppli estimated. The 8-gigabyte version, priced at $599, will cost Apple $280.83.

“With a 50 percent gross margin, Apple is setting itself up for aggressive price declines going forward,” said Jagdish Rebello, a director and principal analyst with iSuppli.

An Apple spokeswoman declined to comment.

Since Apple will face stiff competition in the cell phone market, the company may need to cut into its margins to reduce pricing in the future, he said.

The Apple iPhone, which was announced by CEO Steve Jobs last week, will be available starting in June exclusively through AT&T’s Cingular Wireless. Apple has said it hopes to sell 10 million units in 2008, or about 1 percent of the market.

That goal “seems attainable,” Rebello said.