AfterDawn: News

iPhone 3G only costs $173 to build, says report

According to a new iSuppli report, each unit of the upcoming iPhone 3G only costs $173 USD to assemble and manufacture, meaning Apple could be making upwards of $500 USD profit on each phone sold.

The research group said they "virtually" tore down the phone, based on internal experts in the cellphone and wireless technology fields and were able to estimate the costs of each part and finally the unit as a whole.



If the estimates are true, then the new device will cost 23 percent less to produce then its predecessor, which cost $226 USD to make. The cut costs can be attributed to falling prices on flash memory and other individual parts.

It is believed that AT&T in the US is subsidizing the iPhone for up to $425 USD and are selling the phone for $199. Using some quick math shows that AT&T is paying $624 for a phone that only costs $173 to produce, leaving Apple with huge profit margins in the process.

The report also added that the manufacturing costs should keep declining regularly and that if left untouched, the phone will cost $126 to produce in 2012.

Written by: Andre Yoskowitz @ 25 Jun 2008 15:29

• Previous article

• Could DVB-H be a replacement for GPS?

• Next article

• Gene Simmons blames NIN, Radiohead and fans, for 'death' of music industry

• 8 comments

• area_51

  Not making a profit off me.

  25.6.2008 15:54 #1

• DXR88

  Thats no surprise, You pay for a name these days, just like designer cloths, all it says is that you got money to burn.

  25.6.2008 16:14 #2

• area_51

  Originally posted by DXR88: Thats no surprise, You pay for a name these days, just like designer cloths, all it says is that you got money to burn.
  Exaclty, or mom and dad's money 2 burn.

  25.6.2008 16:30 #3

• canuckerz

  Quote:Originally posted by DXR88: Thats no surprise, You pay for a name these days, just like designer cloths, all it says is that you got money to burn.
  Exaclty, or mom and dad's money 2 burn.And that's why I avoid all this ipod ibook iphone nonsense, its just another stupid fad/gimmick. My psp works just fine for me thanks.

  25.6.2008 16:39 #4

• beanos66

  Quote:if left untouched, the phone will cost $126 to produce in 2012. in 2012 Apple will be on the 4th or maybe even 5th generation iPhone

  25.6.2008 17:31 #5

• Pop_Smith

  Reguardless of weither or not the iPhone costs $173 to make, its no where near the $500 charge.
  
  I know companies have to make money but it doesn't cost them near what they charge.
  
  At the very highest, considering how many iPhones are made, its probably $250 per unit, that is counting every expense paid to the respective places (Manufacturing, licensing fees etc.) and they charge you $500.
  
  I don't see the point of an iPhone, if you really need internet on your phone get a blackberry...

  25.6.2008 17:37 #6

• DVDdoug

  I'm sure Apple is making a nice profit...
  
  But Landor is right. The "Bill of Material" cost doesn't cover everything. It only costs about $1 to make a CD, but the record companies still manage to loose money at $15 retail. (Of course, the record companies are not as well run as Apple...)

  25.6.2008 19:06 #7

• londor2

  Ive been banned

  25.6.2008 20:13 #8