Apple May Have Hit A Per-iPhone Profit Ceiling
Lately, we’ve been spending some time looking at Apple’s fortunes, and why the company may no longer be able to count on the sort of profits it’s seen for the past several years. Some of that has discussed ways in which Apple no longer seems quite so much like the smartphone leader it once was; some of it investigated rumors that Apple would need to target developing markets with a budget-priced iPhone. It sounds like we’re not alone in this kind of thinking, and at least one analyst has been suggesting that Apple may already have its most profitable days behind it, at least when it comes to how much money it’s able to make from each iPhone or iPad sold.
One reason for this, according to Pacific Crest analyst Andy Hargreaves, is that it’s costing Apple more to produce each iPhone 5 than it’s spent on previous-generation models. At the same time, Apple hasn’t been raising prices, and letting those expenses eat into its profit margin. On the tablet front, Hargreaves looks to volume sales of the iPad, presumably for institutional clients, similarly cutting into Apple’s profits.
That all said, iOS gear is still extremely profitable for Apple – this is just a matter of it making slightly smaller giant piles of money.