iPhone 3G Manufacturing Cost of $100?


Recommended Posts

The $199 iPhone: still a money maker

Apple is likely to reap significant profits despite slashing the cost of its updated iPhone in half, said analysts. Although details about the phone are still scarce, sources said they believe Infineon and Samsung have continued to snag the top chip designs in the handset.

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.

The cost cut is also strategic for a company seeking to extend its toehold in the massive cellular market. Apple has sold 6 million iPhones to date mainly in the U.S. in a market where nearly a billion handsets ship each year worldwide.

"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.

Indeed, Apple launched a new subscription service called MobileMe for the iPhone 3G.

The original iPhone used the 2.5G EDGE network which delivers a maximum 256 Kbits/s. The new iPhone 3G uses the HSDPA version of W-CDMA, a standard which supports a minimum of 1.5 Mbits/s and up to 7.5 Mbits/s on some chips sets, including one from Infineon.

"I do believe they are continuing to use an Infineon baseband and RF transceiver and a Samsung applications processor," said Will Strauss, principal of market watcher Forward Concepts (Tempe, Ariz.) based on information from a source he would not name.

Strauss said he expects the new model also uses a global positioning system chip from Infineon based on technology it licensed from startup Global Locate which was recently acquired by Broadcom Corp.

Carey said some observers speculated the iPhone 3G uses Infineon comms chips based on some of the code seen in the software developer's kit for the new version of the handset.

Last month Samsung launched a handset using the same Infineon and Samsung baseband, RF and processor chips. At the time, Samsung stated the Infineon chips cost 20 percent less than similar chips from rival Qualcomm, Strauss said.

Strauss said he believes the entire bill of materials for the Samsung phone could be 20 percent less than a similar design based on Qualcomm chips.

Why the iPhone 3G could be cheaper

Carey of Portelligent said several factors make the iPhone 3G potentially much cheaper to build than the original iPhone.

"I'd suspect the collective volume, learning and engineering changes to the display would mean that the whole touch screen assembly might be about half the $60 or so we estimated for Gen1 a year ago," Carey said. "In addition, the 8 Gbytes of MLC NAND is today around $20 compared to the $50 that might have been the case in June 2007," he added. Carey estimated Apple may have shaved another $25 off the bill of materials costs based on changes he observed in a teardown of the iPod Touch.

Those changes are only slightly offset by new costs for the iPhone 3G. Carey said the additional cost of an HSDPA chip set are only about $15 plus another $5 for the GPS chip. He also noted that the $100 price increase for a model with 16 Gbytes flash adds to the profit margin because the additional memory chips probably cost Apple only about $20.

Netting out all the changes Apple may have had a gross profit based solely on cost of hardware for the original iPhone of $229 and profits of just $99 for the iPhone 3G. "It's always important to point out that hardware BOM costs do not capture many other important facets of product cost such as development costs, software costs, licenses and marketing," he said.

Though profits may be lower, Apple is likely to sell many more units with the new iPhone, said Strauss. Some big markets such as Korea and Japan do not use the EDGE network of the original iPhone, but they do use HSDPA.

Apple announced agreements with a wide range of carriers across Asia, Europe and the U.S. who will sell the iPhone 3G, 22 of them starting on July 11. About another 50 carriers will provide the handset before the end of the year, said Apple chief executive Steve Jobs who announced the handset at Apple's developer conference Monday (June 9).

"I think Apple is going to do very well with this phone," Strauss said. "The fact they have this updated air interface opens many new markets for them," he added.

Both Carey and Strauss noted carriers may be providing an undisclosed subsidy for the new iPhones. AT&T for example, sold a high end Palm Treo phone for $199 after a subsidy, Strauss said.

Carey said the new iPhone probably contains a larger battery based on claims of longer battery life. Apple could easily maintain the existing weight of the handset by using lighter materials in the casing such as plastics which could also improve the cellular reception of the device.

Link to comment
https://www.neowin.net/forum/topic/643613-iphone-3g-manufacturing-cost-of-100/
Share on other sites

very interesting if its true. also, i'd think if this is the case and if they were to have the same setup as last year (no contract signing required in store), and maybe a price of 299 for the 8gig, theyd sell waaay more. just an opinion though

For an extra $20 ($40 or so for us consumers), why don't they just make the 16gb standard and roll out a 32gb when it's available.

definitely good idea. would even show a good image for the iphone that the new version has double storage as the previous

Well apart from the advertising, OS, updates, research, licensing, distribution and all the other things that go into a product such as this... Then all they have is 1 problem getting people to buy one. The $20 manufacturing difference is where the real profit comes in. As with any product if you buy the base model the manufacture gets a little profit, but if you opt for the top end version they get the mega bucks.

Like the low on top end XBox 360 hard drives, cars and all sorts of other products...

Saying that the iPhone was the best phone I have ever owned and I will be getting a new one because of the price drop.

Indeed Punio4. As with most companies, they rip the consumer a new one. Apple is already making a decent profit just on the sale of the phone alone plus they then get a large percentage of the pricey monthly service costs that AT&T is charging just to use the damn thing.

Not true. Apple is not going to be getting a % with the 3G iPhone.

Some people need to take off the anti-Apple goggles and pay attention (not speaking to anyone here specifically). The cost of the new monthly plan has NOTHING to do with Apple and everything to do with AT&T. AT&T requires all 3G phones to pay an extra $30 a month for their plan for data usage.

Source...

AT&T has issued a press release providing additional details about service plans for the iPhone 3G in the U.S. First of all, AT&T confirmed that it remains the exclusive U.S. carrier for the iPhone, which will be available starting on July 11th.

The new iPhones will cost $199 (8GB) and $299 (16GB) with an unlimited 3G data plan costing $30/month. This is an increase from the current $20/month unlimited EDGE data plan for the 1st generation iPhone. Voice plans continue to start at $39.99, but no additional details are provided.

Meanwhile, AT&T reveals that Apple will no longer receive the revenue sharing from each users plans. It was highly publicized that AT&T paid Apple a portion of its monthly recurring service charges for each iPhone user. Under the new agreement, there is no revenue sharing. AT&T is presumably directing that money towards the $200 subsidy for the iPhone.

If the revenue sharing plan is going the way of the dodo, I would expect that there is now an accelerated expiration on that exclusivity clause. The only reason for Apple to have gone with AT&T exclusivity was the monthly kickback. With that out of the picture, this is a straight commodity unit sales deal. And with no less than three very solid iPhone competitors coming out within 60 days (Samsung Instinct, Blackberry Thunder, and HTC Touch), the exclusivity is just going to hurt Apple terribly right now.

So has anyone seen that new contract? 8)

Apple will continue to go with AT&T because they are allowing Apple to control every aspect of the phone. Other wireless companies typically decide a lot of the features and other requirements from what I've read.

Interesting read on the history of the iPhone: http://www.wired.com/gadgets/wireless/maga...16-02/ff_iphone

Apple will continue to go with AT&T because they are allowing Apple to control every aspect of the phone. Other wireless companies typically decide a lot of the features and other requirements from what I've read.

Interesting read on the history of the iPhone: http://www.wired.com/gadgets/wireless/maga...16-02/ff_iphone

very cool read. thanks.

Not true. Apple is not going to be getting a % with the 3G iPhone.

Some people need to take off the anti-Apple goggles and pay attention (not speaking to anyone here specifically). The cost of the new monthly plan has NOTHING to do with Apple and everything to do with AT&T. AT&T requires all 3G phones to pay an extra $30 a month for their plan for data usage.

Source...

Last I checked Apple and ATT signed a contract that gave Apple a large portion of ATT's revenue generated from the monthly service costs for iphone customers in turn for giving ATT exclusivity, if that has changed fine but frankly I don't care.

Ultimately the customer is paying more to use the phone over the past model.

^ Actually it wasn't directed at you (or anyone else in particular for that matter). That I can promise :) I can understand where someone might not have heard about that.

But you'd be paying the same if you purchased any other 3G phone from AT&T, not just the iPhone.

[EDIT] I would like to note that I'm actually not going to upgrade my iPhone. I was going to, but then after looking at the 3G coverage map, my area doesn't have 3G yet and I'd still have to pay for the 3G service even though I couldn't use it where I live. Again, that's an AT&T policy, but that right there stopped me and hopefully it stops others in my area from purchasing the phone as well, at least until they upgrade the network here.

I hate these articles. It is interesting to see how much raw materials a particular product costs but that is SO short sighted.

The biggest cost in high-tech hardware is R&D.

This would be like pointing out it only costs Microsoft $0.01 to burn Windows on a DVD.

Also, making a profit is completely different from turning a profit.

I dont understand why other companies cant offer their phone at similar prices. For examples, HTC Touch Diamond. It cost about $600 with 4GB memory while iphone has better screen, GPS and 8GB memory or N95-4 which has 8GB and GPS but no touchscreen and it still cost about $600

This topic is now closed to further replies.
  • Recently Browsing   0 members

    • No registered users viewing this page.
  • Posts

    • Stellarium 26.2 by Razvan Serea Stellarium is a free open source planetarium for your computer. It shows a realistic sky in 3D, just like what you see with the naked eye, binoculars or a telescope. It is being used in planetarium projectors. Just set your coordinates and go. Stellarium key features: Realistic simulation of the sky, sunrise and sunset Default catalogue of over 600,000 stars Downloadable additional catalogues for up to 210 million stars Catalog data for all New General Catalogue (NGC) objects Images of almost all Messier objects and the Milky Way Artistic illustrations for all 88 modern constellations More than a dozen different cultures with their constellations Solar and lunar eclipse simulation Photorealistic landscapes (more are available on the website) Scripting support with ECMAScript (a few demo scripts are included) Extendable with plug-ins: 8 plug-ins installed by default, including: artificial satellites plug-in (updated from an on-line TLE database) ocular simulation plug-in (shows how objects look like in a given ocular) Solar System editor plug-in (imports comet and asteroid data from the MPC) telescope control plug-in (Meade LX200 and Celestron NexStar compatible) The major changes of this version: Added new sky culture Added new plugin: Planes Many improvements in plugins Many improvements in Core and GUI Many updates in sky cultures. [full release notes] Download: Stellarium 26.2 (64-bit) | 456.0 MB (Open Source) View: Stellarium Home Page | Other Operating Systems | Screenshot Get alerted to all of our Software updates on Twitter at @NeowinSoftware
    • NASA: This asteroid may not kill us but it probably won't be far off either by Sayan Sen Image by Zelch Csaba via Pexels New observations by NASA's James Webb Space Telescope have eliminated the last remaining impact threat posed by asteroid 2024 YR4, ruling out the possibility that the near-Earth object could strike the Moon in December 2032. NASA said observations collected by Webb on February 18 and 26, 2026, enabled scientists to refine the asteroid's orbit enough to "rule out a chance of lunar impact on Dec. 22, 2032." Instead, asteroid 2024 YR4 is now expected to pass the Moon at a distance of about 13,200 miles (21,200 km). The agency stressed that the update "reflects improved precision in our understanding of where the asteroid is expected to be in 2032 rather than a shift in its orbital path." The announcement closes a remarkable chapter in planetary defence that began in late 2024, when the approximately 60-metre-wide asteroid briefly became the most closely watched near-Earth object in the world. Discovered on December 27, 2024, by the ATLAS telescope in Chile, 2024 YR4 initially appeared to have a small chance of colliding with Earth on December 22, 2032. As astronomers gathered more observations, the impact probability briefly climbed to around 3%—the highest ever recorded for an asteroid of its size—before steadily falling as its orbit became better understood. By early 2025, international observations had ruled out any significant risk to Earth. However, astronomers were left with another possibility: a roughly 4% chance that the asteroid could instead strike the Moon. "The probability that asteroid 2024 YR4 will strike the Moon on 22 December 2032 is now approximately 4%," the European Space Agency (ESA) had said last year, noting that "there is a 96% chance that the asteroid will not impact the Moon." ESA said such an impact, while unlikely, would have presented an extraordinary scientific opportunity. "It is a very rare event for an asteroid this large to impact the Moon – and it is rarer still that we know about it in advance. The impact would likely be visible from Earth, and so scientists will be very excited by the prospect of observing and analysing it," said Richard Moissl, Head of ESA's Planetary Defence Office. "It would certainly leave a new crater on the surface. However, we wouldn't be able to accurately predict in advance how much material would be thrown into space, or whether any would reach Earth," he added. The asteroid also exposed an important blind spot in planetary defence. Because 2024 YR4 approached Earth from the direction of the Sun, it remained hidden from ground-based telescopes until after its closest approach. "We looked into how Neomir would have performed in this situation, and the simulations surprised even us," Moissl said. "Neomir would have detected asteroid 2024 YR4 about a month earlier than ground-based telescopes did. This would have given astronomers more time to study the asteroid's trajectory and allowed them to much sooner rule out any chance of Earth impact in 2032." He added, "As an infrared telescope, like Webb, Neomir would have also immediately given us a much better estimate for the asteroid's size, which is very important for assessing the significance of the hazard." The latest NASA observations underscore the value of space-based infrared telescopes in tracking faint asteroids. According to NASA, Webb made "among the faintest ever observations of an asteroid," extending the object's observational record by nearly eight months at a time when it had become too faint for other telescopes. That additional data allowed scientists to eliminate the remaining uncertainty surrounding its 2032 flyby. Although asteroid 2024 YR4 is now confirmed to pose no threat to either Earth or the Moon, scientists say its discovery remains one of the most significant real-world tests of the international planetary defence system, demonstrating how continued observations can rapidly transform an object once considered hazardous into one whose future path is known with high confidence. Source: NASA, ESA This article was generated with some help from AI and reviewed by an editor. Under Section 107 of the Copyright Act 1976, this material is used for the purpose of news reporting. Fair use is a use permitted by copyright statute that might otherwise be infringing.
    • Yup. Google is just scraping the entire internet for their own ad profits without sharing revenue with the sources. It's obviously stealing, but since these sites depend upon Google's search scraps to survive... As for me, I just stopped using Google for anything except Reddit searches. If Reddit's own search wasn't complete crapola, I'd never use Google search again.
  • Recent Achievements

    • Conversation Starter
      Admir earned a badge
      Conversation Starter
    • First Post
      The_Focal_Point earned a badge
      First Post
    • Apprentice
      daryld went up a rank
      Apprentice
    • Contributor
      Carltonbar went up a rank
      Contributor
    • One Month Later
      The_Focal_Point earned a badge
      One Month Later
  • Popular Contributors

    1. 1
      +primortal
      418
    2. 2
      +Edouard
      170
    3. 3
      PsYcHoKiLLa
      130
    4. 4
      Xenon
      69
    5. 5
      neufuse
      69
  • Tell a friend

    Love Neowin? Tell a friend!