Apple Increases iPhone Memory, Margins (AAPL)

No 3G iPhone yet, but today Apple added new iPhones and iPod touches to its product lineup with double the amount of memory. The new 16-gigabyte iPhone costs $499, $100 more than the 8-gig model. The new 32-gigabyte iPod touch also costs $499, $100 more than the 16-gigabyte model.

The new gadgets should give Apple a nice bump in average sales price — we expect a lot of iPhone buyers to consider the model with more storage space for movies, music, etc. — and will also improve the company’s gross margins on those products.

Last July, research firm iSuppli estimated that it costs Apple about $266 to build an 8-gig iPhone, including about $48 for the flash memory. Months later, last October, iSuppli estimated that the 8 gigs of flash memory in the iPod touch costs Apple about $40. We assume the price has dropped even more since then. But for the sake of argument, we’ll assume that 8 gigs of flash memory costs $40, and 16 gigs costs $80. (So we’ll subtract the original $48 memory cost from iSuppli’s July estimate and add those newer memory cost estimates. Again, this is a very rough guess.)

That means an 8-gig iPhone could cost about $258 to make — not including packaging, marketing, distribution, etc. At a $399 retail price, Apple makes about $141 gross profit per phone, or a gross margin around 35%. Meanwhile, a 16-gig iPhone could cost about $298 to make. At a $499 retail price, Apple makes about $201 gross profit per phone, or a gross margin around 40%.

See Also: Apple’s U.K. iPhone Carrier Sweetens Deal. Sales Slumping?
Apple Q1: The iPod Has Left The Building

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