iPhone-3G Estimated Manufacturing Cost is only 174.33$


The launch of iPhone 3G has created a lot of buzz these days, due to its recent launch. Deeply thinking about this new release by Apple, I thought of getting information about the financial advantage to Apple from iPhone. Apple seems to make a lot of money with its new patented creation, whose estimated manufacturing cost is just 174.33$. Apple was supposed to sell iPhone-3G in subsidized rates in U.S.A (only 199$), but the actual selling price is quite high.

The manufacturing cost of 174.33$ (for 8GB version) which is estimated by iSuppli, the authority on gadget teardowns does not include additional costs like software development, shipping and distribution, packaging and miscellaneous accessories included with each phone. However, it does represent nearly a $52 drop over the cost of the original 8GB iPhone(old iPhone).

iSuppli’s Teardown Analysis Service obtained an iPhone 3G on July 11 and commenced a dissection in order to identify component suppliers, as well as to determine preliminary part and system costs.As per the teardown analysis and subsequent examinations by analysts, iSuppli has issued a preliminary estimate of $174.33 for initial production costs for the 8GB iPhone 3G.

The manufacturing cost of the old version iPhone-2G is less than 227$ according to Bill of Materials (BOM) obtained by iSuppli in June 2007, which is higher than that of iPhone 3G .i.e. Apple has worked on reducing the retail price of iPhone 3G by creating a cost-effective model. While there are variations in the components and suppliers for individual products, iSuppli believes that the vendors and parts identified in its teardown likely are representative of all iPhone 3Gs now being shipped—excluding certain memory devices and other commodity parts that are available from multiple sources.

Beyond the $174.33 BOM and manufacturing cost of the iPhone 3G, Apple is spending an estimated $50 on IP royalties per unit of iPhone 3G shipped. With the 8GB version retail-priced at $199, and the estimated $300 subsidy paid by AT&T to Apple for each unit, Apple is selling the product at a price of $499, and spending $224.33 (174.33 + 50) to produce each one. This gives Apple a royalty-profit margin of 55 percent for each 8GB iPhone 3G unit sold.

Now what do u think of this? So much profit….

  • http://mobilemegamall.com/iphone iPhone Maniac

    In business world, I think Apple deserved to earn a lot but I did not expect iphone can earn royalty-profit margin of 55 percent. Anyway, we can do nothing and as an Apple fans, I just wish they will decrease their price.