iPhone costs Apple £86 to build
16th Jul 2008 | 07:54
iSuppli rips out the 3G guts and counts the pennies
Now that they've opened it up and poked around iSuppli has updated its estimated pricing for Apple's iPhone 3G and it's more expensive than they first predicted, by $1.33.
According to iSuppli – whose Bill of Material estimates are always popular – the cost to Apple of making the new 3G iPhone is $174.33 for an 8 Gig version, which equates to £86.78.
iSuppli released an earlier estimate of $173 which was then about £88 in the UK, and their prediction has only shifted by a dollar and change.
"The addition of 3G wireless capability represents an evolutionary design step for the iPhone, not a revolutionary one," said Andrew Rassweiler, who has the grand title of 'teardown services manager' and principal analyst at iSuppli.
"iSuppli believes Apple aimed for a more cost-effective design for the 3G iPhone compared to the 2G, in order to lower the retail price—which will allow the company to seed adoption and to capture maximum market share now—while the company still has buzz and a perceived differentiation relative to its competitors."
The reduction in price of components is a major factor in making the enhanced 3G phone $50 cheaper to produce than its predecessor.
Key differences for the new iPhone from the 2G version include a single printed circuit board (PCB) instead of two nested ones and the fact that the battery is not soldered in place.
Apple has shifted its business model for the 3G iPhone and makes more from the hardware and less from the contracts, with the suppliers subsidising the cost of the handsets.
iSuppli also predicts that Apple is receiving around $500 per iPhone with a spend of $224.33, 55 per cent profit on every phone built.
With over a million sold in the first few days since it was releases this represents a tidy bit of business for Apple, and supply of the device is still some way behind demand at this juncture.