Wow! Apple to see near 50% gross margin on each iPhone

Apple’s profit engine just got a big spurt of juice. iSuppli said Thursday that the company’s upcoming iPhone will squeeze out almost 50 percent gross margins—for both Apple and Cingular.

The iSuppli report said iPhone will provide a hefty profit for both companies as well as leave plenty of headroom for price cuts.

The report underscores the kind of payoff Apple can garner for taking chances on stylish premium products and innovation. Apple reported a $1 billion profit Wednesday, citing gross margins of 31 percent, a 27 percent gain from a year ago (see Apple Profit Up 78 Percent).

“With a 50 percent gross margin, Apple is setting itself up for aggressive price declines going forward,” iSuppli analyst Jagdish Rebello said in the report.

iSuppli, in a preliminary analysis of the mobile phone, said Apple’s 4-gigabyte iPhone will cost $229.85 in hardware and manufacturing costs. The total expense of the phone, however, will run $245.83, it reported. Based on the phone’s announced $499 price, it would yield a 50.7 percent margin, iSuppli teardown manager and analyst Andrew Rassweiler said in the report.

Apple’s 8-gigabyte version of the phone will have a hardware cost of $264.85 and a total expense of $280.83. The phone will sell for $599 and yield a 53.1 percent margin, iSuppli said.

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