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Apple making estimated $254 USD on each iPhone 3G, says iSuppli

16 July 2008 16:18 by Andre "DVDBack23" Yoskowitz | 11 comments

Last month, iSuppli did a "virtual teardown" of the new Apple iPhone 3G and came to the preliminary conclusion that it cost $173 USD to manufacture before IP royalties and other costs such as development and shipping. Today however, the company has released the results of their physical teardown analysis and their conclusion was almost identical. The 8GB model costs $174.33 to produce, before noted costs.

iSuppli used the teardown to identify the component suppliers as well as cost of parts. The aforementioned figure consists of the Bill of Materials and manufacturing expenses.

The new $174 USD manufacturing cost is a sharp decline from the production costs of the first-generation, 8GB iPhone which was estimated at $230.

�The addition of 3G wireless capability represents an evolutionary design step for the iPhone, not a revolutionary one,� said Andrew Rassweiler, teardown services manager and principal analyst at iSuppli. �iSuppli believes Apple aimed for a more cost-effective design for the 3G iPhone compared to the 2G, in order to lower the retail price�which will allow the company to seed adoption and to capture maximum market share now�while the company still has buzz and a perceived differentiation relative to its competitors.�

On top of the manufacturing costs, Apple is estimated to be spending $50 on IP royalties for every unit shipped and about $30 on shipping, research and development and packaging for every unit.

With its $199 retail price tag and estimated $300 subsidy paid on every unit by AT&T, Apple is making an estimated $245 on each 8GB iPhone 3G unit sold after costs and fees.

Permalink to this article | Topic: Phones

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Discuss this article!
sukhvail (Senior Member) 16 July 2008 19:38
1 million sold at 254 a piece= 254 million!!!!!!!!!! that's f@#king insane in just one weekend. Apple is really cleaning house with these. [ + quote]
osteotome (Junior Member) 16 July 2008 21:09
Pretty good profit margin !!! "Sony Rocks !!!!!!!!!!!!!!!!" [ + quote]
taku (Junior Member) 16 July 2008 22:14
now that's a lot of money... [ + quote]
xnonsuchx (Newbie) 17 July 2008 1:29
Keep in mind this is just still a big GUESS on costs...seems to be a lot of "Source Unidentifiable" parts in the list for them to know exactly what they cost. And how much of each iPhone is paying for R&D, royalty and support costs? Stories like this really don't mean much, though some will probably use it as an anti-Apple rant about them being a big ripoff or whatnot. [ + quote]
jetyi83 (Member) 17 July 2008 2:29
*Originally posted by xnonsuchx:* Keep in mind this is just still a big GUESS on costs...seems to be a lot of "Source Unidentifiable" parts in the list for them to know exactly what they cost. And how much of each iPhone is paying for R&D, royalty and support costs? Stories like this really don't mean much, though some will probably use it as an anti-Apple rant about them being a big ripoff or whatnot. youre right i will use it. apple gets away with murder just because they look pretty, and have well implemented marketing. i doubt their reign can last more than 3 years from now. i predict their market share dropping 40% in 3 years. either that, or they keep the same market share and use competitive prices. But that's not going to happen. [ + quote]
jetyi83 (Member) 17 July 2008 2:31
edit [ + quote] This message has been edited since posting. Last time this message was edited on 17 July 2008 2:31
Deadrum33 (Senior Member) 17 July 2008 3:00
Note thats in USD, whats that worth to the rest of the world, 50 euro? 20 pound? LOL!!! [ + quote] This message has been edited since posting. Last time this message was edited on 17 July 2008 3:01
fergus100 (Newbie) 17 July 2008 11:39
the price is insane here in ireland it costs just 49 eur with o2 but this is the sickener 100 EURO TARIF PER MONTH !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! FOR 12 MONTHS [ + quote]
c1c (Member) 17 July 2008 13:22
First off I believe these have to be cheaper to make. Second there is a ton of money that goes into promoting and advertising. [ + quote]
sutjahjo (Newbie) 18 July 2008 2:08
While iPhone's commercial performance is impressive for a new comer, Apple is still a very small player in the mobile phone market. I am not trying to belittle the strong potential of iPhone but simply to clarify the big number quoted in this thread. Here is the latest top 5 mobile phone makers based on industry market share (according to published financial releases). (1) Nokia 40.2% (2) Samsung 14.0% (3) Motorola 12.3% (4) Sony Ericsson 9.3% (5) LG Electronics 7.1% All other brands 17.1% Regards [ + quote]
pmshah (Newbie) 22 July 2008 0:28
Although they say "source unidentifiable" I have come across some very strange facts. During my tenure as a service manager I have seen Casio made colour LCD screens on both Nokia mobile phones as well as on Sony digital cameras. In fact Casio have been pioneers in backlit colour LCD screens for palm size hand held devices like PDAs and TVs. [ + quote]