Apple iPhone is the most profitable product ever
- 5th February 2015
- Innovation & Technology
Apple’s iPhone is likely one of the best product investments in history, with a $150mn investment yielding over $50bn in sales.
The success story of Apple’s iPhone is a shining example of how a product can change a company’s history. Especially since recent figures highlighted that the iPhone must be the most profitable product produced by a company in history.
According to recent estimates, only $150 million was invested in the development of the iPhone. This estimate might seem like a lot, but further analysis of the data reveals that Apple sold over 74 million iPhones in the final three months of 2014, which amounts to a staggering total of $51.1 billion.
That’s nearly 341 times the initial investment and is a huge investment to return ratio and helped Apple power its way to record the most profitable quarter of any company in corporate history.
“There are very few products that have boosted the financials of a company in the way that the iPhone has for Apple,” said Ian Fogg, head of mobile at research firm IHS.
Marketing and branding is key to success
IHS believes that the company’s record quarter was driven by an unusually high profit margin on the iPhone 6 - which IHS believes could be as high as 69 per cent. However, while the high margin is a factor in Apple’s success, the primary reason would likely have to be attributed to the appeal of Apple’s brand.
“Right back to the launch of the Mac in 1984, Apple has been a fashion icon as well as being very good on the technological side. What people want is the cachet that comes with having an Apple product,” said Richard Holway, the chairman of research firm TechMarketView.
Still room left for Apple’s expansion
The appeal of Apple products is spreading across the globe too and is evidenced by the huge demand in the Chinese market, where Apple has been steadily ramping up efforts to promote their brand. In fact, many analysts believe that Apple will soon announce they sold more iPhones in China than they did in the US for the first time last year.
This news illustrates that there are still markets waiting to be tapped and leaves a lot of scope for further expansion into emerging and developing economies.
“People will always need phones and people in developing countries will always want them too,” Mr Holway said.
“Don’t forget, there are huge marketplaces such as India, the middle classes in China and Brazil. You’d be a very brave man to suggest the demise of Apple,” he added.
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