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iPhone profits set to pass $32 Billion a year

The launch of Apple's latest iPhone 4s has caused, as you would expect, a media frenzy. Not only will the sale of existing 3 and 4 handsets grind to a halt, the pre-order hotlines will be glowing red with the sound of millions of pounds being spent on a technology product that is not even in the country yet. So how well can Apple do from phone? KitGuru pulls out the dusty old profits calculator, lays it in the October sunshine for a minute, before pounding the keys.

In the first quarter of 2011, Apple scored just over 16 million iPhone sales. By Q2, that figure had crept to 18 million. With the increased variety available and piss-poor responses from the competition, Apple is now expected to sell around 40 million units in the second quarter of 2012.

The first quarter will be lower and the fourth will be much higher. So, will Apple be able to hit around 160 million units in 2012?

Quite possibly.

Some of these phones will be sold directly from Apple's web site, some from Apple stores and many on contracts through the various carriers.

With pricing for the high-end models, in countries like the UK, reaching up to £600 – the average UK selling price will be just over £400. After sales tax, that's more than $500 (in funny money).

Apple's margins are widely reported as being over 50% on a lot of products, but even if they only picked up 40% on these phones, we are still able to make a calculation.

160 million Apple hand sets x $200 profit on each = $32 Billion.

That's $32 Billion BEFORE anyone downloads a single app.

Sure, it's possible that Apple won't hit 160 million handsets – and to do so might mean price reduced models – but these calculations are where the estimates are presently leading.

Rolling the numbers on iPhone gross profits, produces some pretty scary results. Adding in the apps revenues makes you feel like curling up in a ball in the corner. Blackberry/HTC/Nokia folk: It looks like 'update CV' time.

KitGuru says: With iPhone as one part of its business, the desktop and mobile iMacs as well as the hugely popular iPad, Apple's revenues are set to sky rocket even higher than they are presently. The massed ranks of average Chinese/Taiwanese designers and manufacturers have been left far behind and even Nokia, Blackberry and HTC will be left gasping at the revenues being generated. Microsoft's secret pact with Samsung needs to work, and work quickly, or Apple may never be caught. When you are massively bigger than your competitors, then you have that much more money to spend on R&D, design, marketing and evolved business models. All of which help you recruit the best of the best from colleges – and with the next generation of boffins comes the next generation of patents.

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