Apple’s iPhone X has INSANE profit margins which are going to net $100bn quarterly revenues in 2018
Many analysts have been suggesting, even prior to its actual launch, that the iPhone X would propel Apple into a new “supercycle”. What does that mean? Well it’s essentially a term for a device generation that absolutely blitzes it in terms of sales revenue. The last iPhone supercycle is generally thought to be the iPhone 6, which sold an unprecendented number of units and created massive revenues for Apple.
During a recent conference call with investors, Tim Cook revealed Apple’s forecast for the current quarter, “We expect revenue to be between $84 billion and $87 billion,” he said.
Since then, Apple stock value has been climbing nicely, and not without good reason – that prediction is pretty phenomenal, and as some have noted, Apple usually plays it cool with estimates like this, meaning the actual revenues are very likely to be even higher.
If this does turn out to be the case, not only will it indeed be a new supercylce, and not only will it be Apple’s most profitable quarter ever, it will be the most profitable quarter for any company in history.
It’s now become apparent that the source for this is going to be the iPhone X. That’s not just because we know iPhone 8 sales are appallingly bad – it’s being outsold by the iPhone 7 and Apple has even reduced orders on its production by as much as 50% – it’s also because the gross margin on each iPhone X is INSANE.
We know this because Tech Insights has done an iPhone X tear-down focusing on tallying up the cost of production; the bill-of-materials (BoM) comes to $357.50 per handset, for a phone that retails as $999.
We already knew it was the most expensive iPhone to date for the consumer, but it seems it’s also the most expensive for Apple to produce, but even so, Apple is managing to make a higher margin on it than ever before. Previous iPhone BoM’s have been between $200 and $250, with the iPhone 8 being in this territory with a gross margin of 59%. By comparison, the iPhone X gross margin is a whopping 64%. So, although the iPhone X costs 25% more to produce than the iPhone 8 and its predecessors, the iPhone X is also priced 43% higher.
That calculation doesn’t take into account R&D, marketing, or admin, but Apple has a habit of keeping these figures low anyway (like around 10%). In other words, the iPhone X is carrying Apple to the bank for the next year and probably for a time after that, with somewhere in the region of $100 billion quarterly revenue for 2018 now being predicted.
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