Tencent Digital (Bob) Analysts from Bernstein Research recently stated that the gross profit of Apple's iPhone will further decline. It will fall to 40% in 2017 and to 39% in 2018. Other analysts stated that Agree.
According to the bar graph of the gross profit margin of the iPhone, it can be seen that in 2009, the gross profit rate of the iPhone was as high as 57.7%, and this year it has dropped to 40.8%, except for a slight rebound in 2012, which is almost a downward trend.
Morgan Stanley analyst Katy Huberty believes that iPhone gross profit will continue to decline this year, the reason is that iPhone 7 has a high popularity, which is ironic. The data shows that Apple itself wrongly assessed the demand of the iPhone 7 and caused it to be in short supply. Therefore, it is necessary to add additional orders in December, and this behavior will lead to an increase in production costs.
UBS analysts Steven Milunovich and Benjamin Wilson agreed with the view that future iPhone gross margins will continue to decline. They believe that the main reason is the increase in costs, but the price cannot be effectively raised. The latest report said that next year Apple may launch an iPhone with an OLED screen, which will undoubtedly increase the cost of procurement. In addition, Apple may need to further reduce the price difference between the 5.5-inch and 4.7-inch iPhones, which will also lead to lower profits.
The last factor is maintenance. Analysts believe that Apple did not set aside enough money to pay for maintenance costs. The real cost may be higher than Apple’s estimate and will further reduce gross margins. Recently, iPhone 6s automatic shutdown, iPhone 6 touch screen failure makes Apple quite troubled, for the general failure of older models, Apple needs to make more preparations.
Of course, even if the iPhone's profit is really reduced to 39%, it is still admired by other mobile phone manufacturers. In fact, Apple’s biggest competitor, Samsung, has a smartphone gross profit margin of only about 10-15%, and many manufacturers are even negative profits. Apple is still the most profitable handset manufacturer.
Source: 9to5mac
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