iPhone 3G launch nets Apple estimated $330 million

Apple's launch of the iPhone 3G generated a estimated $330 million profit in its first weekend. The estimate comes from Fortune, based on reported sales from Apple and estimated iPhone production costs/carrier subsidies. A tear-down of the iPhone 3G allowed estimates of its costs and royalties paid, versus the retail price and subsidies paid by AT&T (and other carriers). Add to that a Piper Jaffray survey that suggests purchasers bought 16GB models at a two-to-one ratio over 8GB models. Using Apple's own number of 1 million iPhones sold and a cost per phone of about $175 along with $50 in royalties for the iPhone 3G 8GB and $66 for the 16GB model, Apple's cost per phone was about $224 (8GB) and $240 (16GB).

While consumers paid $200 for the iPhone 3G 8GB model and $300 for the 16GB model, MacNN reported conservative estimates had $499 (8GB) and $599 (16GB) per iPhone going to Apple in carrier subsidies. The total Apple profit per 8GB iPhone was nearly $275 and about $360 for the 16GB model.

With 1 million phones sold, and a two-to-one ratio of 16GB models sold over 8GB models, the numbers show that 333,333 8GB iPhone 3G models sold with a profit of $274.67 -- for a total profit of $91.5 million. As for the 16GB model, it sold about two-thirds of all units, or 666,666, at a profit of $358.67, netting Apple nearly $240 million. Thus the combined profits of the two models hit just over $330 million, the report concludes.

However, some basic costs are not accounted for in the above estimates. Software development costs, packaging, shipping and distribution are not considered. If the subsidy of $300 per iPhone 3G is closer to $350 as some analysts have estimated, the incidental costs would be more than covered, and the profit margin could be even higher.

Filed under: iPhone, industry, Apple