Apple Reduces Build Cost of CDMA iPhone With Design Tweaks

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Feb 10, 2011.

  1. MacRumors macrumors bot

    MacRumors

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    Research firm IHS iSuppli today announced that it has completed its full teardown of the CDMA iPhone that launched on Verizon this week, estimating that the device carries a bill of materials cost of about $171.35, or approximately 9% less than the original iPhone 4.Despite having nearly the same functionality and a similar bill of materials (BOM) as the previous model, the new code division multiple access (CDMA) version of the iPhone 4 carried by Verizon Wireless includes significant changes in its design and component selection, IHS iSuppli teardown analysis indicates.

    The latest version of the iPhone 4 carries a BOM of $171.35, down from $187.51 for the previous model, based on a preliminary pricing estimate issued in June. When manufacturing expenses are added, the total production cost for the CDMA iPhone 4 amounts to $178.45.While some of the difference appears to simply be due to reductions in the cost of components over time and would similarly affect the GSM iPhone 4 if it were evaluated today, Apple has made a few design changes that may have reduced costs for the company.

    Most notably, with Apple's adoption of the MDM6600 "world-mode" baseband chip from Qualcomm offering integrated GPS circuitry, the company has been able to eliminate a Broadcom GPS chip that is present in the GSM version of the iPhone 4. The report also points to a revised version of the Wi-Fi combo chip module from Murata as an example of a design change adopted by Apple for the new device. The new module is smaller than the one used in the original iPhone 4 and represents further optimization by the component supplier.

    Presumably unrelated to cost structures, the report also discusses Apple's modifications to the antenna design, which utilizes a separate Bluetooth/WLAN antenna isolated from the enclosure and allows the company to dedicate a portion of the frame as a diversity antenna to improve reception.

    iSuppli's bill of materials cost estimates account only for the cost of the individual hardware components used in the device, with an additional amount added on to reflect manufacturing costs. The estimates do not include other costs involved in product development, manufacturing, and sales, such as research and development, software, patent licenses, marketing, and distribution expenditures.

    Article Link: Apple Reduces Build Cost of CDMA iPhone With Design Tweaks
     
  2. alent1234 macrumors 603

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    #2
    looks like the price of flash is not dropping as i thought it would

    otherwise it's not really news that electronic parts drop in cost or multiple chips are merged on one piece of silicon
     
  3. qtx43 macrumors 6502a

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    #3
    How can it have similar bill of materials but significant changes in component selection? Do words have meaning? That said, it's nice to see details like this.
     
  4. VenusianSky macrumors 65816

    VenusianSky

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    #4
    And the iPhone still retails for the same amount.
     
  5. alent1234 macrumors 603

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    #5
    the big difference is the radio, everything else is pretty much the same. except for the wifi where the supplier made a change
     
  6. bmms8 macrumors 68020

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    im sorry but your post makes no sense.
     
  7. MarlboroLite macrumors 6502a

    MarlboroLite

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    Very interesting. Remember all the naysayers who were DEAD CERTAIN no CDMA iPhone would ever come about because it would just be SO much more expensive for Apple to produce as one of the main reasons?

    And now the truth is it's costing them less to make and will have higher profit margins than the GSM variant.

    I still suspect Apple would prefer a single version and I think at some point it will be dual mode, but clearly the numbers don't lie...they aren't hurting themselves by having 2 versions.
     
  8. dethmaShine macrumors 68000

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    #8
    He means that the price of the iPhone should be reduced by $10. :rolleyes:
     
  9. Mattsasa macrumors 68020

    Mattsasa

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    #9
    Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_6 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8E200 Safari/6533.18.5)

    K I am confused I thought they both cost about $600
     
  10. gwangung macrumors 65816

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    Which still makes no sense. :D

    Basic Econ 1010: you price it based on demand, not how much it costs you.
     
  11. GFLPraxis macrumors 604

    GFLPraxis

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    Retail.

    iSuppli is estimating that the parts cost $187. Now throw in the cost of assembly/labor, shipping, storage, marketing...

    The price they actually sell at is $500-$600 MSRP, and then they sell them discounted to $199 with a contract.
     
  12. Yankee617 macrumors regular

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    #12
    "When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean — neither more nor less."

    "The question is," said Alice, "whether you can make words mean so many different things."

    "The question is," said Humpty Dumpty, "which is to be master — that's all."
     
  13. sorepheet macrumors member

    sorepheet

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    #13
    Integrated GPS on the chip may explain some of the issues people have been having with their GPS signal not being as strong as it was on previous versions of their iPhones:
    At any rate cheaper cost is promising that there will possibly be a World iPhone for the 5th installment (ideally supporting 1700 3G band for us T-Mobilers)
     
  14. bmms8 macrumors 68020

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    i agree on price based on demand.

    a lot of people dont understand that apple is still getting $600 per phone, whether its on a contract or not. a lot of people also dont understand that the phone costs nearly $200 to make, which is a HUGE chunk of change considering this does not include any other expenses needed to sell the phone.
     
  15. sorepheet macrumors member

    sorepheet

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    #15
    +1 internets
     
  16. foobarbaz macrumors 6502a

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    It was only estimated as 27$ of the price to begin with. It could have halved in 6 months and it would barely make a different.
     
  17. stewart715 macrumors 6502

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    #17
    It's $50 more at Verizon at full retail. $649/$749
     
  18. FearlessFreep macrumors 6502a

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    #18
    Six month-old technology? Maybe not.

    Seems to me there's a couple of 'newer' components present.
     
  19. Salacion macrumors 6502a

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    #19
    Even though flash prices aren't really dropping, it would be nice to see a 64GB iPhone.

    128GB NAND chips already exist. It's only a matter of time until Apple incorporates them into the iPhone.
     
  20. vartanarsen macrumors 6502a

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    #20

    No it does not. True cost of a 16g ip4 is around $650
     
  21. appleguy123 macrumors 604

    appleguy123

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    #21
    It's actually 100$ more expensive :D
     
  22. Mattsasa macrumors 68020

    Mattsasa

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    #22
    wait apple makes the iphone 4 for $170, and sells it for $650?!!!
     
  23. bmms8 macrumors 68020

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    #23
    yes, they sell themselves, market themselves, and ship themselves all to your doorstep all by themselves.

    no wonder SJ only gets a $1 a year :D
     
  24. GFLPraxis macrumors 604

    GFLPraxis

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    #24
    This is the cost of the parts only. No shipping, design, engineering, assembly and labor, etc etc etc.

    Go get a repair done on your car. Part is usually a lower expense than the labor.
     
  25. karohan macrumors 6502

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    #25
    Since you want to talk about basic econ, let me teach you a little something. Price is determined by both demand AND supply. When the cost of production is lowered, the entire supply curve/function/schedule (whatever you want to call it) shifts to the "right". This means that at any given selling price, Apple is willing to supply more units than before.

    The result of this shift, with demand intact, is that more quantity of goods are sold and at a lower price. It seems counterintuitive and worse for the company right? No. Revenue is increased and total profit is increased, even though the profit per device may go down.

    Of course this is just basic econ right? There may be other reasons Apple is keeping the price the same, such as uniformity of prices across carriers, etc etc. But the reason is not what you said it is and its not so straightforward, so try to be less arrogant about it next time.
     

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49 February 10, 2011