Production cost of iPhones?

[coolwater]

I understand non-subsidized iPhones cost six, seven hundred dollars. But, does it really cost that much (minus profit margin) to manufacture an iPhone?

Call me naive, but seeing so many great handheld devices out there around two, three hundred dollars, I wonder if it really does cost that much to make an iPhone especially considering the economies of scale.

 

[gloss]

I understand non-subsidized iPhones cost six, seven hundred dollars. But, does it really cost that much (minus profit margin) to manufacture an iPhone?

Call me naive, but seeing so many great handheld devices out there around two, three hundred dollars, I wonder if it really does cost that much to make an iPhone especially considering the economies of scale.

It costs maybe $150-$200 to build the device itself, but that doesn't take R&D, which is hugely expensive, and stuff like shipping, advertising, etc into account. And then there are always those pesky profit margins.

 

[bigchief]

Thats a subsidized price with a 2 year contract. You will make payments on it just like you would for a car. So $99 is just a down payment.

 

[abijnk]

As gloss pointed out, you have to figure in all the R&D costs and man hours that go into programming the software, too. I'm sure those developers think it is worth that much when they put dinner on the table at night.

 

[AET10]

In the 2007 Keynote, Jobs mentioned that they had spent $150 million over 30 months just on development of the original iPhone. Add in R&D for two more years to get up to the 3GS and there's no telling how much they've spent. My conservative guess would be that Apple has dropped at least $250 million on iPhone dev over the past 5 years.