Apple iPhone costs $100 to build?
Just because Apple's reaching deals to bring iPhone 3G to market at prices most of us can almost afford doesn't mean the company's making no money - far from it, according to a recent tear-down analysis from Portelligent.
'Course. what makes the analysis just the tiniest bit speculative is that Portelligent has released its estimated cost of iPhone 3G manufacture based entirely on educated guesses as to what components are used in the device.
The raw cost of materials to build the iPhone 3G could be nearly half that of the original model, according to Portelligent. While the first model had a build cost of c. $170, the new breed could cost as little as $100 to make, said Potelligent president, David Carey.
"Gen2 iPhone pricing is aggressive enough that it made me think Apple's really taking the gloves off on this one," said Carey. "They are probably not as worried about iPhone hardware profits as they are about getting a piece of the action on service revenues and getting more Macs in homes and offices all around the globe," he added.
From speaking to suppliers in Asia, Portelligent believes Apple uses an Infineon baseband and RF transceiver, a Samsung processor, an Infineon GPS chip.
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Comments (7)
Apple played it well with this one. Get the money right from AT&T right away, rather than spreading out over time. And beat up suppliers for component costs, not to mention good ol' economies of scale kicking in. How much more expensive is the iPhone to build over an iPod Touch? I'm sure not a lot. Apple is making a lot of money on the iPhone. More importantly, Apple is making a lot of converts to the Mac platform.
$100 to build doesn't mean it costs $100. There's development costs, distribution costs, salaries..
Once you've added on the profit margins for apple and the carriers you're talking about *way* more than that.
Of course it'll continue to be priced at whatever people will pay - that's the way the market works (the cost of production is unrelated to the retail price).
actually it does mean it costs $100. the article is just talking about how much it costs to build an iphone. i think youre talking about factors in setting the retail price & profit margins needed. salaries, development, distribution? that has nothing to do w/ how much it costs to build an iphone.
The article is just talking about how much it costs Apple to acquire the raw materials for the iPhone. Other factors that contribute to the total cost, such as designing it and putting the pieces together, is not included in the price.
Why care what it costs to build? The cost to buy it is the only thing that matters.
The subject pretty much sums it up. The cost of the hardware gives a person a good idea about the value of the hardware and the reasonability of the retail price.
By know what the ball park price is one can make a good informed decision as a consumer to do business with the company. For the most part I think it would be best if all consumers had some idea what the cost to produce is on an item they intend to buy.
Dave
iPhone 2.0 is NOT "half the price"!
The new iphone actually costs more than the old one when you calculate the cost of the two year contract. (Data plan is $10 a month more x24 and text messaging adds $5 a month x24.)
It appears that the 3G capability is "dumbed down" (one story suggests for battery life and another says it is just dumbed down). You still won't "own it" as neither AT&T nor Apple appear to be prepared to unlock it as is the normal practice with any other phone you purchase.
I was waiting for this release, and may still be waiting as I am not at all sure that this is worth it.