Sony Ericsson Estimates iPhone Wholesale Price at US$622

Jun 29, 2010
Tadashi Nakamichi, Nikkei Electronics
Hiroaki Kobayashi, marketing director of Sony Ericsson Mobile Communications
Hiroaki Kobayashi, marketing director of Sony Ericsson Mobile Communications
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Apple's three lucrative sources of income
Apple's three lucrative sources of income
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The estimated wholesale price of the iPhone
The estimated wholesale price of the iPhone
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The business model that Sony Ericsson is planning to build
The business model that Sony Ericsson is planning to build
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Hiroaki Kobayashi, marketing director of Sony Ericsson Mobile Communications AB, delivered a speech on Apple Inc's and Sony Ericsson's business strategies.

He spoke at Android Bazaar and Conference 2010 Spring, which took place June 26, 2010, in Tokyo.

First, Kobayashi pointed out that Apple keeps a profit ratio of as high as 23%, referred to the company's business models and explained how Apple uses other companies to turn profits. He said Apple has three lucrative sources of income; they are the market for applications software, the iPhone and accessories. It is well known that, in the application market, application developers have to pay 30% of sales amounts to Apple as sales commission.

iPhone wholesale price estimated at US$622

Apple has not disclosed the wholesale price of the iPhone. However, calculated from the volume of shipments and the sales amount, it is US$622 per unit, Kobayashi said.

"Considering that the iPhone is sold at US$199, mobile service providers are bearing a burden of about US$400," he said.

In regard to accessories, Kobayashi said that Apple is turning a profit of several tens of billion yens from the "Made for iPhone Program," in which the company provides the logo of the iPhone for third-party companies' products. The stocks of those products being sold at the Apple Store do not belong to Apple but to third-party companies. Therefore, the sales of accessories is a low-risk, high-return business for Apple, he said.

Sony Ericsson is planning to build a business model to turn profits from those three sources of income, Kobayashi said.

"We will build good relations with application developers, mobile service providers and accessory manufacturers to expand our business related to the Xperia as we've done with retailers for our home appliances such as TVs," he said.