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iPhone 3G Manufacturing Cost of $100?

Sunday June 15, 2008 10:45 pm PDT by Eric Slivka
EETimes.com reports that technology teardown experts Portelligent have estimated that the bill of materials (BOM) cost to Apple for the iPhone 3G could be as low as $100. While merely an estimate based on assumed components used in the new model, this is significantly lower than the $170 BOM cost at launch for the original iPhone that Portelligent estimated based on their actual teardown of the phone.

Cost savings are estimated to primarily be derived from the touch screen display (decrease of $30), NAND flash memory (decrease of $30 for 8 GB model), and adoption of other components seen in the current iPod touch but not in the original iPhone.

Those changes are only slightly offset by new costs for the iPhone 3G. Carey said the additional cost of an HSDPA chip set are only about $15 plus another $5 for the GPS chip. He also noted that the $100 price increase for a model with 16 Gbytes flash adds to the profit margin because the additional memory chips probably cost Apple only about $20.

While Apple has announced a price of $199 for the iPhone 3G in the U.S., carriers are presumed to be providing Apple with subsidies of up to $200 for each iPhone, meaning that Apple's gross profit on the iPhone 3G may be significantly higher than for its predecessor. It should be noted that other expenses, including research and development, software, licensing, and marketing, are not reflected in these numbers and would reduce Apple's profit by an undetermined amount.
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nagromme
Posted: 48 months ago
"It should be noted that other expenses, including research and development, software, licensing, and marketing, are not reflected in these numbers and would reduce Apple's profit by an undetermined amount."

R&D... not a small thing :o

And one more little thing not covered in that $100 estimate... manufacturing! Parts don't assemble themselves :)

Ah well.. the article says "could be," since they haven't actually taken the new iPhone apart. They've taken apart the old one. Guesswork, then--without the information that a real teardown will reveal next month.
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badcrumble
Posted: 48 months ago
If this is the case, there's absolutely no reason Apple shouldn't already have a $399 32GB model on the market RIGHT NOW except for the fact that they want an upgrade path for January (storage) and then again next june (camera stuff). Pathetic.
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tirerim
Posted: 48 months ago

If this is the case, there's absolutely no reason Apple shouldn't already have a $399 32GB model on the market RIGHT NOW except for the fact that they want an upgrade path for January (storage) and then again next june (camera stuff). Pathetic.


Well, or that they can't fit 32 GB of chips in the same size case. Not necessarily true, but at least possible.

Also, if you actually have enough money to buy a new phone every year or even six months, congratulations, but I don't imagine most people are going to be upgrading that frequently. The only reason for an "upgrade path" is if you actually expect people to be buying a new one at every iteration.
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macduke
Posted: 48 months ago

If this is the case, there's absolutely no reason Apple shouldn't already have a $399 32GB model on the market RIGHT NOW except for the fact that they want an upgrade path for January (storage) and then again next june (camera stuff). Pathetic.


Pathetic? Really?? Its called business.

What other phone has 16gb of memory, much less 32gb?

If Apple had given us everything we ever wanted the first time around, they wouldn't have an iPhone business anymore. That sucks, but that's life. If it bothers you that much, then wait until the 32gb version comes out. But by then people will probably be complaining about how there's just absolutely no reason why Apple shouldn't have a 64gb version on the market RIGHT NOW.

Pathetic.
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zephead
Posted: 48 months ago

If Apple had given us everything we ever wanted the first time around, they wouldn't have an iPhone business anymore. That sucks, but that's life.


As much as that sucks for us, you're absolutely right. If the 1st-gen iPhone had 32GB storage, 5MP camera, 3G data, video-conferencing, GPS, and even MMS, then what could they come up with on the new version?
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CrackedButter
Posted: 48 months ago
These tear down estimates are useless if they omit x,y,z. Why are they given coverage if they estimate things piecemeal?
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Passante
Posted: 48 months ago

If this is the case, there's absolutely no reason Apple shouldn't already have a $399 32GB model on the market RIGHT NOW except for the fact that they want an upgrade path for January (storage) and then again next june (camera stuff). Pathetic.


And how is Apple not meeting your assumptions about the iPhone "arousing pity, esp. through vulnerability or sadness" or " informal miserably inadequate"?:rolleyes:
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mavis
Posted: 48 months ago

Pathetic? Really?? Its called business.

What other phone has 16gb of memory, much less 32gb?

If Apple had given us everything we ever wanted the first time around, they wouldn't have an iPhone business anymore. That sucks, but that's life. If it bothers you that much, then wait until the 32gb version comes out. But by then people will probably be complaining about how there's just absolutely no reason why Apple shouldn't have a 64gb version on the market RIGHT NOW.

Pathetic.

Well said. ;)

I'm disappointed by the lack of a 32GB iPhone, but I'll pick one up as soon as they're released (assuming there are cosmetic changes as well - not a big fan of that cheap looking, scratch prone glossy plastic) ... Anyway, a 16GB iPhone 3G will certainly hold me over until then!!
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steve_hill4
Posted: 48 months ago
I don't get the rationale behind switching to a plastic back. If the rumours are true, and usually they aren't, Apple will transition away from plastics with the next MacBook iteration. They have already begun to do so with the iPod line and iMac.
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edesignuk
Posted: 48 months ago

I don't get the rationale behind switching to a plastic back.

By all accounts signal strength has improved greatly.
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