This is a well established and key metric for any analyst following the company.
HTC reported results. In 2010, they sold 24.6 million phones. Profit was $500million. That works out to $20.33 profit per phone.
IOW, HTC needs to sell 30 phones to make the profit that Apple makes selling one iPhone. Let’s say they managed to triple their profitability per unit; they’d still only make $61 a phone. I’ll leave you to draw your own conclusions.
nolavabo 12:33 pm on January 21, 2011 484 days ago Reply
Along the same lines, here’s an article about Apple having a “secret” strategy to handicap their iPad competition. Is HTC proof of how razor thin margins are for their competitors, even in the phone sector?
http://www.businessinsider.com/apples-fiendishly-clever-plan-to-kneecap-its-tablet-competition-2011-1
Nicu 12:51 pm on January 21, 2011 484 days ago Reply
ASP for iPhones was about $625 in Q1 so there is no way they make $615 profit … maybe $400 is a reasonable guess (taking into account manufacturing, shipping, marketing, warranty / replacements, sales costs etc.)
nolavabo 1:48 pm on January 21, 2011 484 days ago Reply
You’re correct, Nicu. I was confusing ASP with profit, and even then got the number wrong.
On checking the rough estimates, the $400 figure is the profit figure. I vaguely recall several bloggers calculating it for the 3G and they all ended up with between $380 and $405. That is to be compared with $20.33.
Just as FYI, HTC made $3.564 bln sales, or an ASP of ~$145, resulting in $500mln profit.
nolavabo 1:49 pm on January 21, 2011 484 days ago Reply
That’s still 19x the profit per phone though, so my original point still stands. Phew.
rastard 4:17 pm on January 21, 2011 484 days ago Reply
Huh? You appear to be comparing Apple’s *direct* profit per unit against HTC’s total corporate profit divided by phones sold. That’s a complete apples to oranges comparison, as it assumes that all of HTC’s financials are connected directly to those 24.6 million phones (i.e. you’re completely ignoring corporate overhead costs, R&D costs for not-yet-sold products, etc.
nolavabo 2:26 am on January 22, 2011 484 days ago
Okay, okay, I need to drink more coffee, sleep more and post less
Both you and Nicu are right, I was comparing Apples to Oranges. Now as my penance, I did the work and here are the real figures.
Assuming Apple costs don’t vary much from Q to Q, the ratio of gross profit from this ER minus ALL expenses incl tax, gives us
10,298 gross profit / 6000 (net profit) = 0.58ish
The guys who do teardowns and cost analysis, iSuppli, calculate an iPhone 3GS costs $178.96, the 4 costs $188 (google these numbers and isuppli to find links). Given the ASP of $625, assume $438 gross margin per phone. Let’s also assume the iPhone doesn’t cost Apple significantly more in R&D etc than Mac. Yes, I’m assuming a lot but the real figures are not available.
0.58 x $438 = $255 net profit per iphone if the iPhone were a stand alone company. Put another way, all the overhead expenses are about $183 per unit.
HTC’s business is, according to the radio report that made me start looking at this in the first place, 95% Android handset now, so I consider it reasonable to simply average out the profit. If they had another arm of the business, like a loss making real estate division, I would agree with you. HTC Android ASP is $364 according to Bloomberg. Let’s assume they cost just somewhat less to build than iPhone. HTC parts are cheaper but Apple gets legendary prices by forward buying. Let’s assume overhead is less than Apple because it’s Taiwan, not USA. $364 – $169 overhead – $175 parts = $20 net profit per phone.
So the headline of this topic should be, Apple makes $255 per phone, while HTC makes $20.
This is still 12x, so building in errors in both directions we are still left with an order of magnitude greater than the competition.