Monthly fees aside, it looks like the cost consumers will pay for the new 3G iPhone isn't that much more than what it costs Apple to make them.
iSuppli, a research and
advisory firm known for its detailed "teardown" analysis of what
products cost to make, has just issued its early take on the iPhone's
bill of materials (BOM).
The first 3G iPhones aren't due out until
July 11, so in this case iSuppli analysts did what the company calls a
virtual teardown. Their conclusions are
essentially estimates of what it costs Apple to build the new device
based on what Apple has detailed publicly, and iSuppli's analysts
knowledge of and contacts with parts suppliers in the areas of semiconductors, displays, mobile handsets, consumer electronics and wireless infrastructure.
"We made some assumptions
about what was changing in the 3G iPhone and what was staying the
same," Jagdish Rebello, director and principal analyst for iSuppli,
told InternetNews.com.
Rebello said his sources
confirmed reports that Apple is receiving a subsidy of about $300 from
AT&T for every iPhone sold in the United States. The 3G iPhone will sell
for $199 plus a two-year contract of monthly fees. iSuppli pegs Apple's
BOM and manufacturing cost total to be $173 per unit. iSuppli said the original
8GB iPhone cost Apple about $226 to make, and Apple has since benefited
from component price declines for a 23 percent reduction in hardware
costs. "The new iPhone is
significantly less expensive to produce than the first-generation
product, despite major improvements in the product’s functionality and
unique usability, due to the addition of 3G communications," Rebello
said. Apple did not return a
request for comment at press time. The company traditionally doesn't
comment on details of its product design outside of its events. The 3G iPhone was previewed by CEO Steve Jobs and other Apple officials earlier this month at the company's Worldwide Developer's Conference.
Since its release, the
iPhone has received publicity and "buzz" despite a tiny presence in the
overall market for mobile phones. "We don't see Apple
becoming a dominant player in market share for the foreseeable future,"
Rebello said. "But it's an innovator that's helping the market grow and
helping to define a lot of advances in user interface."
He said market leader Nokia (NYSE: NOK),
for example, has about a 40 share of the market, while the iPhone at 10
million units will reach 1 percent share worldwide. Of course the iPhone's impact on the market has been impressive given it's only been available for about a year.
Rebello also said the 3G iPhone has some improvements in the touch technology
that will help it maintain its competitive advantage. "There are a lot
of iPhone wannabes," he said. "But Apple still has an advantage in user
interface, and it's kept its sleek design."
Story courtesy of internetnews.com. 
