Huge profits:
http://www.isuppli.com/Teardowns/News/Pages/iPhone5-Carries-%24199-BOM-Virtual-Teardown-Reveals.aspx
Huge profits. But all high end phones must be.
$699 - $238 = 461, Wow.
But remember the S3 is £500 and clearly can't be too much more expensive NFC, bigger screen and battery are the only differences, but possibly counteracted by a plastic body so I think all companies are trying for the same slice of pie. Like when tablets first came out they were all £600, and now anything too much over £200 seems expensive.
There's no incentive for prices to come down much for phones at the moment because people mostly get a phone on contract (distanced from the true price of the phone) and want the next big thing (I wonder how many sales were simply for Siri), but when the phone you plan to upgrade to can't do anything more than your current phone other than gimmicks and you can save £500 by skipping it I imagine the mid-price range will start to get competitive. PAYG and £200 will be attractive again. I imagine we're only a year or two away from that point since most phones have dual core or quad core processors and both Android and iOS are starting to slow pace wise in terms of demand for hardware.