iPhone price tag double that of parts

Apple sells the iPhone at more than double production costs, suggesting the new handset may be more profitable than rivals from Motorola and Nokia Oyj.


The $599 model has component and manufacturing costs of $265.83, which translates into margins of more than 55 percent, according to iSuppli Corp. The research firm tore open an iPhone to identify its components.

While the 55 percent figure is higher than the gross margin of some of Apple's rivals, that alone doesn't determine how profitable a product is, said Bill Choi, an analyst with Jefferies & Co. in New York.

Other costs are marketing and research and development, and Apple still needs to sell a "critical mass" of iPhones to cover development costs, he said.