iPhone 3GS: $179 to build says iSuppli

iSuppli's just released its estimated cost of Apple's newest offering, the iPhone 3GS. Total costs for the 16GB model costs $178.96 to manufacture, according to them -- give or take $4.63 more than the 8GB iPhone 3G estimate from last year. It's also about $40 more than iSuppli's most recent manufacturing estimate for the Palm Pre. The estimate covers only materials, and doesn't take into account various costs such as shipping and distribution, packaging, royalty fees or all the miscellaneous accessories included with each handset. Regardless, it definitely looks like Apple's managed to step up the innards of the phone without a significant bump in costs.

[Bigjmaster14 @ Jun 24th 2009 3:26PM]

pretty cool

[ajnauron @ Jun 24th 2009 3:25PM]

Lol what's with the lego in the corner?

[wtfx @ Jun 24th 2009 3:32PM]

It was used in the assembly of the 3GS.

[Dillon @ Jun 24th 2009 3:40PM]

At least two green lego bricks are essential components in the circuits of all modern cellular devices. You cannot substitute these with megablocks.

[wtfx @ Jun 24th 2009 3:42PM]

And while Knex may be a cheap alternative, it will bite you in the ass in the long run.

[IvanP91 @ Jun 24th 2009 3:47PM]

hmm looks like the kext icon on mac os.

and lol guys nice @ "used in the assembly" =D

[Gi @ Jun 24th 2009 3:53PM]

They consume less energy than lincolnn logs

[Gi @ Jun 24th 2009 3:59PM]

They consume less energy than lincolnn logs

[Heavytoka @ Jun 24th 2009 4:03PM]

@Gi +1

[EI8HT @ Jun 24th 2009 5:26PM]

LEGO USB
http://www.engadget.com/2008/02/26/solid-alliance-offers-up-lego-like-usb-flash-drives/

[Dr. Spaceman @ Jun 24th 2009 3:27PM]

+ millions in research and development.

[Paul a. Chapel @ Jun 24th 2009 3:30PM]

On the other hand, this price estimate also doesn't take in account the deals that Apple gets buying components in bulk. They have preferred status after all those years making iPods, especially with flash components.

[CreepinJesus @ Jun 24th 2009 4:06PM]

Don't forget the extra $200 for the Apple logo!

[CtrlBurn @ Jun 24th 2009 4:26PM]

+$Texas in security software.

[Wii60 @ Jun 24th 2009 4:37PM]

iPhone 3GS R&D-

Step 1- Take existing processor, ramp up clock speed.
Step 2- Add compass

Don't get me wrong, I like the 3GS even though I'm on a T-Mo G1 now. It was already a solid device, and I'm ok with this update. Considering the 3G (and 2G for that matter) are still pretty fresh, it's ok for an update to be incremental in nature. That said, there's no way R&D cost them much.

[Hotrod @ Jun 24th 2009 4:44PM]

@Wii60

They didn't just ramp up the clock speed, it's a different processor.

[adrian @ Jun 24th 2009 5:22PM]

@CreepinJesus,

No no, the Apple logo functions more like a multiplier. So you take manufacturing costs, multiply by 2, add shipping and handling and voilá!

(love Apple by the way, just can't deny the fact that Apple tax is hard to cope with in these hard times :P)

[Joel @ Jun 24th 2009 5:52PM]

Yeah, but you forget the important function of the Apple logo. I mean, I'd pay $200+ for a small apple shaped mirror the perfect size to check if I have something in my nose

[mojohat @ Jun 24th 2009 8:36PM]

Agree with Dr. Spaceman. Plus, when does computer hardware ever cost anything now a days?? Your paying for the software. Like a single seat of CAD retails for $3K, or a single user MS Office Pro License goes for around $440. For just ONE, Lol! Hardware costing anything??? Nah....

[Runner50783 @ Jun 26th 2009 9:11AM]

Ahhh fan boys... people,

Apple is one of the most profitable technology companies due to their HIGH sales margin..., they average 35% margin vs around 20% or less for the competition. This all benefit end users as that's their top priority right?

R&D???, of course they do their R&D, but they don't even design most of the components, they just go to the market, threat some manufactures to get sole rights to use their tech, create a layout and sent the layout to a third party manufacturer.

They may do a lot of R&D when they are deciding which features YOU should be able to use in the next OS release. After all if you eat all at once you may get satisfied sooner... They always think in surprising you.

[kjb434 @ Jun 24th 2009 3:30PM]

It really show how much solid state memory prices have come down.

[Paul Mensah @ Jun 24th 2009 3:32PM]

Do you think Apple makes more money from iPhone than it does with Macs? Just wondering ...

[wtfx @ Jun 24th 2009 3:45PM]

If you look at how much of the computer market share Apple holds vs. how much of the cellular device market share they have, I think there is a clear winner.

[Absolute92 @ Jun 24th 2009 3:51PM]

@wtfx

which one because I really don't know, maybe Macs because they all cost over 1000 dollars, I guess.

[bobartig @ Jun 24th 2009 4:16PM]

I'm certain that the margins on phones are much better than on computers of any sort. Apple has margins around 20-30% for their computers, but for iPods and iPhones, its probably more like 100%. Er, 100% markup, which equals 50% margin? I mean, know what I mean. An iPhone costs $200 to make, and they can sell it for $400. They can't apply the same moon-math to their compys.

[Cheddar @ Jun 24th 2009 3:38PM]

Unfortunately iSupply has no idea what types of favorable purchase contracts Apple may have negotiated. They are quoting street prices for components, however, I would be willing to wager Apple has been able to negotiate some significant discounts from "street" pricing.

That and since this is so similar to the 3G I imagine there is little in additional R&D compared with the original iPhone or the 3G.

Can you say...Money Maker!!

[Ramin @ Jun 24th 2009 5:18PM]

Money Maker

[aaron @ Jun 24th 2009 3:38PM]

Business 101

[pavlindrom @ Jun 24th 2009 3:57PM]

Your face again... Extremely bad. What is it, the talent, the skills, or the vision that is to blame for this?

[john @ Jun 24th 2009 4:26PM]

behold!

http://tinypic.com/r/28bcrus/5

[kezzerxir @ Jun 24th 2009 3:43PM]

If I wasn't on a Sprint Sero plan with 1250mins, unlimited data and txt w/ free data tether via WMWifiRouter I'd get an iPhone. I'm getting sick of dealing with crappy phones but I put up with it to save a lot per month.

[Rassah @ Jun 24th 2009 6:02PM]

HTC Touch Pro2.....

[phil.lenton @ Jun 24th 2009 3:43PM]

"...all the miscellaneous accessories included with each handset."

LOL!

[Alex @ Jun 24th 2009 3:45PM]

It helps that flash memory keeps coming down in price. Woo!

[SteveJ @ Jun 24th 2009 3:49PM]

I finally decided to bite the bullet and put in an order for an iPhone 3G S. Prior I've only had pay-as-you-go phones, the current one I have only costing $100 *per year*. I'm not sure if it was a mistake or not, to pay $70+ a month, but it does so much and I love my iPod touch (first gen). I can't wait for it to arrive.

[BJ is Gooder @ Jun 24th 2009 4:02PM]

Your post makes you sound incredibly American. Take it however you like...

[RPM @ Jun 24th 2009 9:35PM]

@ BJ is Gooder

And you sound like a whining European never grateful for "Americans" and all we do through out the world.

Take it however you like...

[NoelSM @ Jun 25th 2009 3:55AM]

Ya I too have low cost phones and keep thinking about getting the iPhone. I have a 1st gen iPod Touch and I love it. Good luck and im sure youll enjoy it. Jus remember Apple is makeing a BUTT LOAD of money off that phone.

@ BJ is GOODER
STFU! Hes excited about gatting a new phone and all you can do is criticize him?

[pika2000 @ Jun 24th 2009 3:50PM]

I think iSupli should do this analysis for all smartphones, so consumers can know how cheap they actually are vs what companies are charging them full MSRP, especially the ones that are $600-$700 MSRP. Yeah, I know that there is R&D and whatnot, but does it translate to the ridiculous markups properly, especially for phones that just license the OS (Winmo, Android, etc) instead of developing one in-house?

[wtfx @ Jun 24th 2009 3:57PM]

That would be cool. I would like to see this for some of the HTC phones.

[iRoc @ Jun 24th 2009 4:20PM]

Just proves that it's so not worth the unsubsidized price tag! Hence the lack of opening day sales and AT&T's move to bump those that spend the most each month up a year for upgrade. You just can't year after year get people to drop near a grand for a phone. The unsubsidized price is a slap in the face to consumers when you take the build cost into consideration.

Don't get me wrong being bumped up I will be upgrading, but only because the 3G S is worth $330 it's gonna cost me. I would have waited another year for what better be something special. I'm even holding back upgrading one of my lines just to be elligable again. :)

Paul a. Is right Apple gets a huge discount for bulk, and I'm willing to bet they then "demand " another discount by way of contract for future orders.

[LaughingMan @ Jun 24th 2009 5:47PM]

I don't know what reality you live in where the iPhone 3G S didn't outsell expectations... Were you still thinking that just because there were no crazy lines at all the stores that the iPhone must have failed? A LOT of people took advantage of delivery to home.

http://www.engadget.com/2009/06/22/apple-moves-one-million-iphone-3g-s-units-in-a-weekend-just-in/

A million were sold in the first weekend. That's the same pace as the iPhone 3G. The analysts only expected 700K.

[manohar dudda @ Jun 24th 2009 4:01PM]

so they make a profit of just 20 bucks per phone????

[Phoenix @ Jun 24th 2009 4:04PM]

No. AT&T sells it for $199, but APPLE sells it to AT&T for a hell of a lot more. Even if you but from apple direct, you still need an AT&T contract (or at least you should). The cost is covered by the contract.

[erik1080 @ Jun 24th 2009 4:22PM]

One can only imagine how much AT&T pays Apple for exclusive rights to the iPhone...

[brian.m.jones @ Jun 24th 2009 4:47PM]

@erik

When the Iphone first came out, it was half. AT&T gave Apple HALF of each subscribers monthly fee. Not monthly fee after paying the bills, but half, up front, and they then had to make up their expenses out of the remaining half.

[Beastage @ Jun 24th 2009 6:49PM]

It costs 600USD without contract so they are making about 500USD per 16GB 3GS (Prolly costs Apple ~100usd to make it)

[Phoenix @ Jun 24th 2009 4:04PM]

electrical components go down in cost. This is what happens.

[maveric101 @ Jun 24th 2009 7:02PM]

truth.

"it definitely looks like Apple's managed to step up the innards of the phone without a significant bump in costs. "

that should be expected of any designer/manufacturer.

[ewann @ Jun 24th 2009 4:06PM]

R&D aside.. since the only difference between the 16Gb model and the 32Gb model is just a little bit of memory.. How do they justify the extra 100 bucks for the 32Gb model?