Five years later, iPhone revenue hits US$150 billion

Apple's iPhone has been a sales juggernaut since its launch, and a new study from research firm Strategy Analytics seems to drive that point home.

Apple's iPhone 4S
(Credit: Apple)

Since the iPhone's launch in June 2007, Apple has generated cumulative revenues of US$150 billion, according to Strategy Analytics. Neil Shah, senior analyst at Strategy Analytics, told CNET that this number only includes hardware sales. Accessories, apps, software and services, which typically represent 3 per cent to 5 per cent of Apple's iPhone revenue each quarter, were factored out.

Moving on to hardware units, Strategy Analytics said that 250 million iPhones have shipped globally.

Despite the obvious good news for Apple, the research firm is not necessarily sure that Apple can hold on to the same level of profits that it has secured in the iPhone market over the last several years.

"There are emerging signs that the iPhone's next five years could get tougher," Strategy Analytics executive director Neil Mawston said yesterday in a statement. "Some mobile operators are becoming concerned about the high level of subsidies they spend on the iPhone, while Samsung is expanding its popular Galaxy portfolio, and providing Apple with more credible competition."

According to Shah, the "concern" carriers are having comes down to economics. He told CNET that with Apple's US$600 wholesale iPhone price to carriers, companies like AT&T and Verizon are forced to take a US$300 to US$400 hit when they sell the device for US$199 or US$299 with a two-year contract. And Apple, seeing that it "has the selling power", is unwilling to negotiate that pricing, Shah said.

It's a much different story for popular Android-based devices, like the HTC One X or the Samsung Galaxy S III. Shah told CNET that while the wholesale price on the Galaxy S III is high — he believes it's about US$500 or US$550 — carriers have been able to negotiate that down to US$400 or so, making the chances of them quickly getting their cash back much higher.

"The Galaxy S III subsidy is considerably lower," Shah told CNET, adding that popular Android-based devices could make carriers think twice about playing so nicely with Apple.

Still, not everyone is so sure that carriers will do much to change things. In a research note published last month, Morgan Stanley analyst Katy Huberty said that all three US iPhone carriers are required by contract to provide certain subsidies, and that those agreements will remain in place for years. What's worse for carriers is that the contracts won't expire at the same time, effectively eliminating their chances of teaming up on Apple to lower subsidies.

Apple, meanwhile, is free to continue to rake in the cash.


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