A discussion about the software industry and their coders

hey, if i am not wrong, 199$ on 98.71$ cost of production is a 100% margin of profit...

Hi,
The Gross Margin Calculation is correct. You, I guess are referring to Profit as ((Revenue - Cost/Cost)) and your calculation is correct.
The url for forumula/concept of Gross Margin is on Wikipedia: http://en.wikipedia.org/wiki/Gross_margin
Notice I am using Gross Margin *not* Profit. And cost of componets is one direct cost involved for a gadget. Direct Labor is the other cost and it is not included by iSuppli.
Finally, there will be other costs involved that are shared across a business / product line / product range. These costs (Sales & Marketing, Admin, Taxes) although in aggregate are high -- would be very small for a single iPod and difficult to calculate or perhaps less relevant in the context of this post.

"Interestingly only Apple seems to be making a positive Gross Margin on its gadgets. Sony and Microsoft are deep in red."

Research in Motion is making a profit on the hardware, this is also the case for Motorola, Nokia, etc. The console market is a bit special but Nintendo is not selling its consoles at a lost like Sony or MS.

"By the same tear-apart method iSuppli estimated the cost of iPhone."

How can you tear apart an iPhone if you can't get your hands on one? :-)

The iSuppli estimate is disputed by DisplaySearch: "However, there’s a much less bullish calculation on the issue today from DisplaySearch… The big issue is the cost of the display. DisplaySearch contends that the display - a 3.5 inch screen with 320 x 480 resolution - will cost Apple close to $60, or nearly twice other estimates."

Hi,
1) Thanks for the info on Display Search.
2) "How can you tear apart an iPhone if you can't get your hands on one"
Agree that iPhone isnt available. What I meant was that iSuppli worked out the cost of components for an iPhone through "the knowledge" gained by rip apart of several hundreds of related/similar devices. If you have ripped apart a few 1000 mobile phones and ipods and DVD players and know the cost of their components -- calculating costs for iPhone's shouldnt be that tough? Its like if you are in the business of car repairs and have been around for several years ripping them apart then when a new car comes and you know its performance -- you can work backwards and figure out whats new or different in the car etc.
Thanks for the info on Display Search.

Hi,
1) Thanks for the info on Display Search.
2) "How can you tear apart an iPhone if you can't get your hands on one"
Agree that iPhone isnt available. What I meant was that iSuppli worked out the cost of components for an iPhone through "the knowledge" gained by rip apart of several hundreds of related/similar devices. If you have ripped apart a few 1000 mobile phones and ipods and DVD players and know the cost of their components -- calculating costs for iPhone's shouldnt be that tough? Its like if you are in the business of car repairs and have been around for several years ripping them apart then when a new car comes and you know its performance -- you can work backwards and figure out whats new or different in the car etc.

How about the R&D ? does it not count for a significant portion of the overhead / equation and make it more informative ?