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Component Cost Of iPhone 3G Estimated By iSuppli at $173

Businessweek has a recap of newly-released preliminary research from market research firm iSuppli indicating that the component costs of Apple's iPhone 3G will stand at $173 for the 8GB model, down from $226 from the original 4GB version.

Another market research firm has previously estimated the iPhone 3G's component cost at approximately $100, however that firm had estimated a $170 cost for the iPhone's previous incarnation, seemingly agreeing with the notion that Apple has been able to cut costs while adding features with the new iPhone.

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Posted: 51 months ago
how much does R&D and advertising cost?
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Posted: 51 months ago
not only does it not take into account R&D, manufacturing, and advertising; but no one has these yet to actually confirm the exact parts, right? so just how accurate can this be?
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Posted: 51 months ago
hence that the site is called "macrumors.com"? perhaps, you pratically have to take everything with a grain of salt until it is confirmed through official channels
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Posted: 51 months ago

hence that the site is called "macrumors.com"? perhaps, you pratically have to take everything with a grain of salt until it is confirmed through official channels


Apparently, the truth... hurts! :D
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Posted: 51 months ago
R&D for most tech firms is about 15% of budget. Advertising for Apple is lower than most consumer firms, except iPod has had quite a few ads, mainly billboards. Still only around 5%.

Rocketman
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Posted: 51 months ago

R&D for most tech firms is about 15% of budget. Advertising for Apple is lower than most consumer firms, except iPod has had quite a few ads, mainly billboards. Still only around 5%.

Rocketman


Not to mention the software development, as well as the cost of assembly, warranties (as unfortunately parts do break over time), and also shipping the products all around the world (although shipping costs would be extremely low per unit).
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Posted: 51 months ago

hence that the site is called "macrumors.com"? perhaps, you pratically have to take everything with a grain of salt until it is confirmed through official channels


so when do you think apple will confirm the component costs through "official" channels, I wonder? :rolleyes:

Also, why are you guys knocking the accuracy of this report, citing R&D costs? The article made it clear that the estimate was for component costs, not total cost to apple.
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Posted: 51 months ago

R&D for most tech firms is about 15% of budget.


That's correct. However...

Apple only spends 3% of their income on R&D.

Not to mention the software development, as well as the cost of assembly, warranties (as unfortunately parts do break over time), and also shipping the products all around the world (although shipping costs would be extremely low per unit).


Electronic assembly line labor in China costs $1.50 an hour. R&D for the 3G model, easily well under ten million dollars, would be recovered with the first 100,000 sales even if they only made a paltry $100 per unit over other costs.

They save for warranty replacements, by not spending money up front on extensive testing before shipment. (IIRC, surveys showed that iPods have about a 13% return rate. I suspect the more complicated iPhone is greater.) Cheaper just to wait for customers to find something wrong and return it. (Ironically, it also makes Apple look good because they give replacements so easily. As well they should.)

Don't worry, Apple makes a tidy profit on their gizmos.
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Posted: 51 months ago
I'm not sure why MacRumors has to post this. This report tells us what exactly? People who don't read the whole thing see the component cost, don't put two and two together, and feel they're getting ripped off when there's a lot more to it than that. We've all known Apple makes healthy margins on their products... so what?

You think Jobs' $1 salary skews their 3% R&D figure at all? ;)
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Posted: 51 months ago
Yes, if one figures that AT&T and the other phone co's are subsidizing the cost, and you figure that the unsubsidized prices are more in the $400 (8GB) to $500 (16GB) ranges, and even if Apple sells to those phone co's in bulk at a reduced price (say, take $50 off each of those prices), Apple is still making $150-200 or so over production cost PER unit...

$150 per unit covers a LOT of advertising, R&D, shipping, packaging, warentee replacements, support, software development, etc.
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