The iPhone, America’s most profitable product

By , Jun 28, 2013

iPhone and American flag

Apple’s iPhone isn’t just the nation’s top smartphone brand, it’s also the most profitable product in America, according to a Friday report. Despite having around just one-fifth of the overall smartphone market globally, or nearly 40 percent in the U.S. alone, the handset enjoys the industry-leading 40 percent operating margin, producing more than half of Apple’s $156.5 billion in 2012 sales. That profit margin is almost double that of the iPad, which grossed “only” $32.4 billion, according to MarketWatch…

MarketWatch remarks:

According to documents released as a result of the patent lawsuit between Apple and Samsung, Apple’s gross margins on the iPhone were between 49 percent and 58 percent from April 2010 to April 2012, nearly double that of the iPad.

The Apple tablet earned $32.4 billion in sales last year, moving 58.3 million units.

By contrast, iPhone sales have skyrocketed: during the same period, more than 125 million iPhones were sold, a 73 percent hike from 2011, netting Apple an astounding $80.5 billion in revenue.

The key is the carrier handset subsidy, which can amount to $425 per unit, according to a recent Stifel Nicolaus analysis. But while the margin may be shrinking, it is huge compared to the other American products deemed profitable.

For example, #2 Marlboro has a 30 percent margin and $19 billion in sales.

Other products mentioned in the MarketWatch story include energy drink firm Monster (#3 with 26.7 percent margin and $1.9 billion in revenue), Coca-Cola (#4 with 25 percent margin and $14.3 billion in 2012 sales) and kid’s nutritional food maker Enfamil, which rounded out the top five with 24 percent operating margin and $2.3 billion of revenue.

Apple logo (American flag, money)

Despite the shrinking profit margin, emphasized during the recent uproar over iPhone 5 orders and the resultant falling stock price, the iPhone’s 40 percent margin is higher than Apple’s overall margin of 35.3 percent.

Others have worried Apple’s rumored venture into lower-cost handsets could damage its profits. Today’s ranking of the iPhone is no surprise given Apple’s ability to squeeze maximum profit while also having a small portion of overall smartphone sales.

The iPhone has 39 percent of U.S. smartphone subscribers, yet the Android platform is chosen by more than 50 percent of domestic subscribers,  measurement firm comScore announced today.

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  • Boss

    So how much does it cost Apple to make the iPhone 5 than? $80

    • Maxim∑

      about ~207-238$ excluding outer chassis,transportation,packaging,accessories,marketing,logistics and labor pay per device.

  • Muhammad

    America’s most profitable product, designed in California, made in China

    • David Villamizar

      LMAO!

      • hush

        What’s so funny? These days everything is made in China.

      • David Villamizar

        It’s quite ironic, I’m not from the US, admire products made there, but it turns out that they are not made there. A country that sells millions of products to the rest of the world, won’t get taxes because of products made somewhere else. Having Apple there, the benefitted is China. It’s so stupid it sounds funny to me. Sorry if you don’t get the irony.

      • hush

        You think USA doesn’t get any taxes? That’s ridiculous. Everything is made in China because of the cheep labor. Got it? Cheep labor = more profits.

      • David Villamizar

        I never said the US gets no taxes, what I said is that China is getting the most out of these companies in terms of taxes. Hope you got it, since both of us have already wasted time in comments just to explain what is supposed to be obvious.

  • Gorgonphone

    uh oh this will make android lovers mad as hell…lolooo

  • gunther80

    america?………

    UNITED STATES , AMERICA IS A CONTINENT

    • https://twitter.com/MrElectrifyer MrElectrifyer

      It sure is, but here in Canada, most citizens don’t like to be called Americans, ’cause it gives people a notion of what you’re (due to the U.S.’s doings) and their reaction isn’t usually pleasant. On the contrary, being called Canadian tends to mostly result in a pleasant reaction (again, due to Canada’s doings). So, America(n) is often referring to only the U.S. whenever used in dialog…

      • Tyler

        So you mean to tell me that when you’re in Canada? And you tell people you’re Canadian? They react pleasantly? Shocking

      • Kurt

        Huh? I thought Canada was the 51st state?

    • Nick

      North America is a continent and South America is also a continent. all the countries within these continents make up “The Americas”. The United States are actually “The United States of America”. Therefore when you state “American” or “America” without putting north or south in front of it the rest of the world will understand that this means you are talking about the USA.

      Take a geography class before you embarrass yourself.

      • foster

        Man North and South america are not continents.. America is a continent. When you state “american” you are refering to the whole continent not to USA. But what happens is USA thinks he is the king of the world and auto proclames themeselves as americans, as if there were anyone else on America

      • Kurt

        In germany i’m called an Amerikaner, in Spain i’m called an Americano, this goes for other languages also…would you like to take a guess as to what Amerikaner and Americano means?

      • EpicFacepalm

        There is no universal model for continents. Wikipedia has a good article for this. I think this makes confusion.