Roughly Drafted has posted another interesting take on isuppli’s guesswork as to whatthe iPhone components might cost as part of its “Most Absurd iPhone Myths” article. Interesting line:
“Reports from iSuppli also change over time. More recently, iSuppli revised its estimates on the Xbox 360 to claim that Microsoft now spends only $323.30 on the $400 model, a difference of more than $200, 38% under its previous estimate. How much expertise is needed to tell us the Xbox 360 costs somewhere between $325-525?”
Read the rest, it’s very well argued and has some interesting information.
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iSuppli’s preliminary estimate is grossly distorted by the Gizmodos of the world (“OMG Fanboy Tax LOL!!!11″) but on the other hand RD is exaggerating.
The Xbox teardown analysis was performed twice with a one year interval. The bill of materials was not reduced by 38 percent overnight and in the first report iSuppli rightly said that it would go down during the first year because, amongst other things, IBM and ATI yields would improve. Costs tend to go down over time when a product is in high volume production and Microsoft has sold more than 10 million Xbox 360s.
Gross margins are not to be confused with operating margins. As noted by Roughly Drafted, Apple’s guidance on margins is 12 percent, in line with the previous year, but Peter Oppenheimer was talking about Apple’s operating margins. iSuppli is estimating gross margins. Apple’s gross margin is way higher, 31.2 percent for calendar Q4 for instance.
What’s inside the iPhone? Samsung Electronics, Infineon, Broadcom, are rumored to be the “iPhone winners.” If you know their portfolio you can get a rough idea of the hardware bill of materials. DisplaySearch is disputing iSuppli’s analysis because the multi-touch panel could add significant cost, the display is obviously the trickiest part of the equation.
Apple don’t report individual product margins and the secrecy is always fueling speculation. If you add that the iPhone won’t be available for at least six months, iSuppli just couldn’t help themselves.