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Stefan Constantinescu

It really just comes down to higher profit per device, but expect that to come down as time goes on and more reference platforms are available, as well as cheaper components.

Smartphones have traditionally been associated with high end, and that always = double digit, over 30% margins, some times even over 40%, on hardware.

Chris Vail

In the US, you are tied to a service provider, who charges monthly fees for internet access (a key feature of the smart phone). I believe Apple gets a cut of this monthly fee, in addition to getting a cut from the sales of apps for the smart phone. Since smart phones are subsidized (you get them at about half price with a two year contract), I suspect the profits come from the recurring expenses of the smart phones.

HYAO

Agree with Stefan. Smart phones definitely have much higher margins than regular phones. When you consider Apple and RIM have nothing but smart phones, it kinda makes sense. This is not the case with Nokia, Sony Ericsson and Motorola etc. They have broader portfolios in order to grab more market shares.

BTW I think for a smartphone, it's unacceptable to have a margin that's less than 30%.

Perhaps that also explains why these high end devices do not have good penetrations in markets that don't subsidize, like India. At least one of the reasons (Brand recognition would make it up, though)

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