iSuppli: iPhone 3G costs about $173 to build

iSuppli: iPhone 3G costs about $173 to build

Summary: According to a virtual teardown by iSuppli, the iPhone 3G costs 23% less to build than the original 8GB iPhone.


According to a virtual teardown by iSuppli, the iPhone 3G costs 23% less to build than the original 8GB iPhone.

iPhone 3GiSuppli had calculated that the original version of the iPhone cost around $226 to build, but thanks to a drop in component prices, the build costs of the 8GB iPhone 3G is only $173.

That saving of $53 is good news for Apple, since under the new deal with AT&T Apple no longer receives a portion of the carrier's revenue from service subscriptions (iSuppli estimates that Apple gets some $300 per iPhone sold).

Electronics being what they are, the build costs of the iPhone 3G will drop over time (assuming that the hardware stays the same). By 2009 the build cost will be down to $149, while by 2012 it could cost as little as $126 per handset.

Now that carriers are subsidizing these handset the price that Apple wants for them doesn't really matter as far as end users go - in some countries the price for getting onto the iPhone bandwagon is the cost of a contract. I wonder how long it will be until the iPhone is free (excluding contract) in the US?

Topics: iPhone, Apple, Hardware, Mobility, Networking, Wi-Fi

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  • iPhone 3G costs as litle as $100 to make....

    The raw cost of materials to build the iPhone 3G could be nearly half that of the original model, according to Portelligent Inc. (Austin) that conducted a teardown analysis of the first handset. The first phone had a bill of materials estimated at $170 at launch, but the iPhone 3G could have a BOM as low as $100 when it debuts July 11, said David Carey, president of Portelligent, a division of TechInsights, the publisher of EE Times.

    Obviously, my source has the correct information?

    [b]Who are you going to trust an engineer or some stupid business major? ;-p[/b]
  • good for Apple

    That's pretty good actually.
  • apple saves, you don't

    unfortunately, those savings aren't being passed onto the consumer -- sure, a $200 pricepoint seems like a great deal, until you realize that AT&T and Apple just buried the costs in the now more expensive service plan (additional $10 more expensive now) and took away the text bundle (an additional $5 to add).

    So in total, while Apple is making more money, the consumer is paying $160 more over the contract span for the new iPhone compared to the old (see <a href="">article</a>)
  • RE: iSuppli: iPhone 3G costs about $173 to build

    It's still worth the money for me!

  • And by the way...

    Mr. Adrian Kingsley-Hughes:
    I just wanted to thank you for your work on ZDNET. You are one of the very few that has any sort of credibility at ZDNET. Most of your colleagues simply plagiarize the work of others while you often break new ground.

    I do appreciate your efforts immensely.

    Thank you
  • And we care because...?

    Uh, Apple is NOT a non-profit organisation. They, along with phone service providers, offer a service at a price. If you think the price is too high, don't buy the product.
    Unless you own Apple shares, determining the profit margin is a waste of time.
  • Materials are only part of the iPhone costs

    People tend to forget the years of R&D
    investment, the ongoing work of engineers and
    programmers, plus designers. Then throw in the
    management costs associated with the iPhone
    and everything else. The expenses on the other
    side of gross margin will be paid for out of sales,
    just as the items on the BOM are.
  • RE: iSuppli: iPhone 3G costs about $173 to build

    • iphone

      i like iphone but whene lanch in india