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

[BlizzardBomb]

So that explains why it's £440 in the UK on PAYG. Oh wait, what? That's almost a 200% profit margin?

 

[cbw87]

So that explains why it's £440 in the UK on PAYG. Oh wait, what? That's almost a 200% profit margin?

Tell me about it. The sooner Apple just start selling this thing unlocked without carrier margins the better: rumour has it that O2 is sticking £120 quid on that price for their year of data - there's no way to just "buy the new model" and upgrade without either paying for data you already have or taking a full subsidised contract.

********.

The iPhone needs carrier competition and unsubsidised straight-to-consumer handset sales, ASAP.

 

[Goona]

I think it's somewhat funny how we all sit here and talk about how much something costs in relation to what it is sold for. The reality of economics is that if you are willing to pay for it, they will charge for it. Trust me, if the iphone was not a blow out product that has sold millions and millions of phones, they would either have sold them way cheaper, or stopped making them.

Likewise, actual competition helps us out. For instance, they are selling the original 3g 8gb for $99 subsidized. Now, I am pretty sure this was a direct response to the release of the palm pre. Just my 2 pennies though.

You would have a point if the price of purchasing a Palm Pre was cheaper than an iPhone.

 

[chrmjenkins]

what's up with the 2gb SDRAM?
edit: oops, it's Gb not GB

Yeah, it's 2 Gb, or 256 MB. I don't know where people are pulling 512 MB from.

What is the $6.50 manufacturing cost? Direct labor and plant overhead? What sort of cost model is this analysis using? I've had a year of management accounting there is just not enough information about where they are getting numbers and what is included or not in them for this to be meaningful besides the pricing of direct materials -- though we can't know for sure what kind of discounts Apple may even be getting on that. It admits to excluding enough costs, and is ambiguous enough, that it doesn't really tell us anything about the true profit margin of the iPhone 3GS.

It is this company's job to do teardown and cost analysis. I'm sure they have a pretty good idea what they're doing.

 

[phillyeagles615]

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.

exactly

 

[svndmvn]

Yeah, it's 2 Gb, or 256 MB. I don't know where people are pulling 512 MB from.

that makes sense, but at the same time the memory MCP is supposed to be 128Mb NOR and 512Mb Mobile DDR
while the 3g has 64Mbit NOR and 32Mbit PSRAM
how much of a difference does that make?

 

[chrmjenkins]

that makes sense, but at the same time the memory MCP is supposed to be 128Mb NOR and 512Mb Mobile DDR
while the 3g has 64Mbit NOR and 32Mbit PSRAM
how much of a difference does that make?
*snip*

Ok, I see where the 512MB comes from. It's actually 512Mb (64MB). PSRAM (pseudo-static) is probably for suspending the phone and dumping parts of the RAM to a non-volatile memory to save power. This is similar to suspending your computer to the hard drive to save power but not completely turn off.

 

[steamed.hams]

Don't forget that R&D (research and development) takes millions, or even tens of millions of dollars to be spent before a single 3GS hits the shelves...!

 

[BlizzardBomb]

Don't forget that R&D (research and development) takes millions, or even tens of millions of dollars to be spent before a single 3GS hits the shelves...!

I seriously doubt the 3GS needed much more R&D considering that it's basically an incremental bump on iPhone 3G.

 

[chrmjenkins]

I seriously doubt the 3GS needed much more R&D considering that it's basically an incremental bump on iPhone 3G.

It's probably similar to the 3G cost. What it didn't have in external design it made up for in internal redesign. It has a ton of new components in there.

 

[TSX]

I think one of the reasons its so cheap to make is because, apple buys millions of each part. Im sure they get a discount buy buying 10 million+ processors, now if they only bought 100 processors the cost would go up.

 

[E.Lizardo]

look in the mirror, buddy

we are the ones losing out b/c ATT locks you into a 2 yr deal, at like 70 per month. 70 * 24 = $1,680. that easily covers the cost of the phone, and then PLENTY more.

And of course we all know their network cost nothing to build and maintain.

 

[chrmjenkins]

And of course we all know their network cost nothing to build and maintain.

I DO know text messages don't cost them near 20 cents to send

 

[Maserati7200]

This article fails to mention the cost of shipping and taxes.

 

[E.Lizardo]

Tell me about it. The sooner Apple just start selling this thing unlocked without carrier margins the better: rumour has it that O2 is sticking £120 quid on that price for their year of data - there's no way to just "buy the new model" and upgrade without either paying for data you already have or taking a full subsidised contract.

********.

The iPhone needs carrier competition and unsubsidised straight-to-consumer handset sales, ASAP.

It's been done(see 1st gen iPhone price)

 

[E.Lizardo]

You would have a point if the price of purchasing a Palm Pre was cheaper than an iPhone.

So making the iPhone cheaper than a pre is not competitive how?

 

[hexor]

iPod Touch

iPod touch is nearly same hardware (minus phone, gps, camera, compass). I highly doubt that extra hardware costs $500+ more than an iPod Touch to justify the unsubsidized price of an iPhone.

 

[miniConvert]

I'm quite surprised by how expensive the iPhone is to produce, to be honest. Add on the substantial software development and R&D, and all those pesky licencing costs, and I think it's quite easy to see how the iPhone gets to its selling price.

 

[TSX]

that makes sense, but at the same time the memory MCP is supposed to be 128Mb NOR and 512Mb Mobile DDR
while the 3g has 64Mbit NOR and 32Mbit PSRAM
how much of a difference does that make?

Can someone show me where to buy these parts online so i can put my own iPhone together.

 

[chrmjenkins]

Can someone show me where to buy these parts online so i can put my own iPhone together.

Please tell me this is a joke.

 

[diabolic]

Please tell me this is a joke.

I'm pretty sure he's making a point.

 

[TSX]

Please tell me this is a joke.

Yea it was a joke. If it wasnt i would be putting some iPhones together and sell them on eBay for some serious cash.

 

[Feng Shui]

These just pop into my head: R&D, shipping, rent, security, and advertisement costs. Did those get added in?

 

[chrmjenkins]

Yea it was a joke. If it wasnt i would be putting some iPhones together and sell them on eBay for some serious cash.

Forgive me, but not recognizing your posts plus no distinguishing characteristic on this forum = I have no idea if you're serious

 

[sammich]

With all the crap that flies around when an iSuppli article comes out, I wouldn't mind a slashdot like rating and thus, automatic threshold ignoring of comments.

So that explains why it's £440 in the UK on PAYG. Oh wait, what? That's almost a 200% profit margin?

Do the carriers still have to pay Apple a monthly royalty?

Oh, and I think it's funny how they use the term "Grand Total" at the bottom of their list. So it takes into account everything?