16 GB iPhone 3GS Teardown Reveals $178.96 Parts and Manufacturing Cost

[MacRumors]

Research firm iSuppli today announced the results of its teardown of the new 16 GB iPhone 3GS, estimating the device's parts cost at $172.46, with an additional $6.50 in manufacturing costs bringing the total cost to $178.96. The data compares to a total cost of $174.33 for the 8 GB iPhone 3G at its launch in July 2008.

BusinessWeek provides a full analysis of the iSuppli report, noting that Apple's flash memory costs have been adversely impacted by pricing increases precipitated by production cutbacks in response to economic conditions. While Apple previously relied on the ability to be able to double flash memory capacities at the same price point over models from the previous year, the recent fluctuations have resulted in Apple having to pay more in order to bump the iPhone 3GS's capacity to 16 and 32 GB.

iSuppli's teardown also reveals that Apple is using the same BCM4325 combination Wi-Fi/Bluetooth chip from Broadcom used in the second-generation iPod touch, resulting in a cost savings over the iPhone 3G, which had used two separate chips, a Wi-Fi chip from Marvell and a Bluetooth chip from CSR.

As always, iSuppli's cost estimates do not include software, research and development, distribution, and patent royalty costs. Consequently, Apple's true costs are considerably higher than the figures cited in these studies, leading Apple to sell the iPhone at price points hundreds of dollars above the manufacturing costs. Wireless carriers in turn offer subsidies to customers in exchange for signing multi-year contracts, bringing the final handset cost to the consumer back down to lower price points, such as the $199 price for the 16 GB iPhone 3GS in the U.S. on AT&T.

Article Link: 16 GB iPhone 3GS Teardown Reveals $178.96 Parts and Manufacturing Cost

[TheOrioles33]

I CANT BELIEVE APPLE! The nerve of them trying to make a profit!!!!

[angemon89]

They use 2x8GB nand chips in the 16GB, right?

[bakerster]

why is it not 179.99?

[spydertim]

I got ripped off I paid $199!

[SkippyThorson]

Damn you, Apple! Shame for trying to profit off of the advancement of a product that took the world by storm - 3 times nonetheless!

[Eidorian]

Hello subsidized price.

[mca7]

9 to 5 mac is reporting that the new iPhone actually has 512 of RAM. Any truth?

[Beric]

Originally Posted by angemon89

They use 2x8GB nand chips in the 16GB, right?

No. It's 1 16GB chip (see the link). The iPhone has always used one NAND chip, and the iPod Touch two, hence why the iPod Touch always has twice the capacity. The reason is the phone transmitter, etc. take up space.

[jlseattle]

Originally Posted by Eidorian

Hello subsidized price.

So how much does AT&T pay of this cost? So if I renew my contract early I'm paying 599 for the phone. What and who is losing?

[bigmc6000]

Originally Posted by angemon89

They use 2x8GB nand chips in the 16GB, right?

Nope, 1 chip. There's only room for 1 (vs. 2 for the Touch). That's why when they update the touch they tend to give it a max of double because it's using two iPhone chips.

the 32GB is 1 chip as well.

EDIT: Dang, Beric beat me :-P

[Mattie Num Nums]

Originally Posted by jlseattle

So how much does AT&T pay of this cost? So if I renew my contract early I'm paying 599 for the phone. What and who is losing?

No matter what Apple is making money because ATT pays them.

[mkrishnan]

Originally Posted by mca7

9 to 5 mac is reporting that the new iPhone actually has 512 of RAM. Any truth?

iSuppli reported the same in the linked article, did they not?

Well, so Apple has made tidy but not major progress in cost reducing the constant portions of the iPhone. Enough to justify the add-ons but not enough to improve the likelihood of much lower cost hardware...

[bobertoq]

Originally Posted by bakerster

why is it not 179.99?

They wouldn't make any money if they sold it at that price.

[igazza]

Originally Posted by angemon89

They use 2x8GB nand chips in the 16GB, right?

no,1 and it comes in at 24 dollars

[Eidorian]

I think people should take into account the subsidized price and the other price points before saying that it should be sold at 'X' price.

[evilspoons]

What does the iPhone 3G cost to build now?

[swingerofbirch]

Plus you have to consider what just one phone call to AppleCare costs them...lots of costs you would never think of...then again they're certainly not hurting when you think of the thousands of dollars ATT/Apple get over your contract....hopefully they are using some of that money to build their network up.

[nemaslov]

And don't forget to add in marketing, packaging, online tutorials and shipping costs. Plus they need to make a profit...

[thomahawk]

if you think this is a big deal
check out other phones. like the sidekick or android G1 or whatever. those phones cost a certain price but sell at a substantially higher price.

its the only way to make money for phone companies and manufacturers alike.

so dont go blaming apple or AT&T that your getting ripped off

[Kwill]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 3_0 like Mac OS X; en-us) AppleWebKit/528.18 (KHTML, like Gecko) Version/4.0 Mobile/7A341 Safari/528.16)

Now iSuppli needs to do a "teardown" on AT&T billings of $100+ per month.

[Michael73]

None of us (Apple not included) will ever know the true cost of the product. What makes these phones so awesome are the interface, OS AND form factor. Any teardown is useful for the information of the component cost both on it's own and in comparison to other devices but in no way should be representative of the actual cost of the entire device.

I think that iSupply should make it clear that the software, research and development, distribution, and patent royalty costs are not just related to Apple, but also to all the other manufacturers of the parts in the phone.

[uberamd]

How much did those $100 jeans cost to make? Or that $5,000 suit? Or that $50 meal at the fancy restaurant? For the love of god these creation-to-retail price arguments are idiotic.

[Shiner]

I hate articles like this for the simple reason, they do nothing but cause confusion.

The iphone costs $599 dollars plain and simple. It does not cost $199-like the stupid article says. The $199 is the subsidized price of the iphone. AT&T pays the rest.

Who cares how much the parts cost to put together. That has very little to do with the final cost.

If anything you can see that apple always maintains the exact same profit margin on all of their devices.

The parts cost the same as the 3G when it came out. Only reason apple puts these parts in the phone. When OLED allows them to make the same profit they will place it in the phone. Same goes for all of their computers. Follow the money trail.

[fishcove]

Interesting to those waiting for the iPod Touch upgrade as well.

Camera : $9.55
GPS: $2.25