iPhone 3GS: $179 to build says iSuppli
By Laura June 
posted Jun 24th 2009 3:20PM
posted Jun 24th 2009 3:20PM
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.
pretty cool
Lol what's with the lego in the corner?
It was used in the assembly of the 3GS.
At least two green lego bricks are essential components in the circuits of all modern cellular devices. You cannot substitute these with megablocks.
And while Knex may be a cheap alternative, it will bite you in the ass in the long run.
hmm looks like the kext icon on mac os.
and lol guys nice @ "used in the assembly" =D
They consume less energy than lincolnn logs
They consume less energy than lincolnn logs
@Gi +1
LEGO USB
http://www.engadget.com/2008/02/26/solid-alliance-offers-up-lego-like-usb-flash-drives/
+ millions in research and development.
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.
Don't forget the extra $200 for the Apple logo!
+$Texas in security software.
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.
@Wii60
They didn't just ramp up the clock speed, it's a different processor.
@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)
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
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....
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.
It really show how much solid state memory prices have come down.
Do you think Apple makes more money from iPhone than it does with Macs? Just wondering ...
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.
@wtfx
which one because I really don't know, maybe Macs because they all cost over 1000 dollars, I guess.
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.
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!!
Money Maker
Business 101
Your face again... Extremely bad. What is it, the talent, the skills, or the vision that is to blame for this?
behold!
http://tinypic.com/r/28bcrus/5
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.
HTC Touch Pro2.....
"...all the miscellaneous accessories included with each handset."
LOL!
It helps that flash memory keeps coming down in price. Woo!
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.
Your post makes you sound incredibly American. Take it however you like...
@ 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...
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?
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?
That would be cool. I would like to see this for some of the HTC phones.
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.
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.
so they make a profit of just 20 bucks per phone????
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.
One can only imagine how much AT&T pays Apple for exclusive rights to the iPhone...
@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.
It costs 600USD without contract so they are making about 500USD per 16GB 3GS (Prolly costs Apple ~100usd to make it)
electrical components go down in cost. This is what happens.
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.
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?
Because they can.
We want more and we're willing to pay that much for it? Yes, I purchased the 32 GB model. I have a 16 GB iPod Touch (first gen) now, so I wanted an upgrade and $299 for the 32 GB model is significantly cheaper then the 32 GB iPod touch, so it didn't seem a big deal to me. Not to mention that it's a drop in the bucket compared to the monthly fees....
Ohh what I'd give for a micro SD slot.
Justify what? You want the extra flash ram or not?
By the way, this is nothing new. I'm certain that this isn't the first example of this, but Palm did the exact same thing when they released the Palm Vx in 2000. It came with 8 MB onboard flashram instead of the standard 2 MB of the Palm V, and cost $100 more. Cost of an 8 MB flash chip at the time was about $16, so people comfortable with SMD soldering would chop open their palms and stick their own aftermarket chip in there.
The justification is that you get 16gigs more of storage. This is the way it is. I don't really expect these companies to justify any of this.
And its being sold +700$/800$ from apple unlocked in many countries
180$ for the phone and 620$ for the apple logo i always knew that apple was ripping off there fans
i dont know which is worst apple or there fans but as long as they stick to each other i'm happy
I dont want this type of freaky fans or companies around me
How old are you?
I guess that doesn't matter, old or young you're a moron either way.
You are right about how hardcore Apple fans are willing to pay what ever so others see them with what ever new thing Apple has out. What's worse is the douchesque attitude they outwardly project. Like having Apples newest makes them better than everyone else. That shows some serious lack of self worth when you get it from what you own.
I love my iPhone, but it's not worth $700 + and it in no way defines me.
34 and i know the truth hurts sometimes , its mind puzzling how can you defend apple with this one but as i said "Freaky fans"
Call me moron or whatever you want but I'm not the one who is buying this overpriced and outdated piece of junk for all that $$$ when it cost about nothing compared to other advanced phones, outside of your little apple world, people call your type of people douche bags
DR House...
As opposed to what? ALL of the handset manufacturers charge hundreds of dollars more than the cost of components of their phones for an unsubsidized phone.
Nokia, Samsung, Palm, LG, Sony Ericsson. Every single manufacturer, i can search for an unlocked phone and come up with one that retails for $500, $600 or $700 or more. Why single out Apple?
Why not hate all phone manufacturers for making such a tidy profit? Do you have a cell phone? What brand?
You want them to sell there phones for no profit at all? samsung/Sony ericsson high end phones that sell for 500-600 have specs that iphone fans cant even dream off even at 2015
Better screen resolution
HD playback and capture
AMOLED Screen
Ability to expand storage with memory cards
better and replaceable battery
DNLA/BT2/ETC
12MP Camera and xenon flash that take better pictures than mid range compact cameras with face detection/focus/stabilization etc
High quality build
i can go on and on
etc they are giving you latest technology available while apple giving you cheapest technology available
Where can I buy a phone with all these features? And how much does that phone cost to produce, according to the same method as iSuppli?
The iPhone should be compared to its peers, not some magical jesus phone you dreamed up.
http://www.engadget.com/2009/04/29/palm-pre-138-to-build-according-to-isuppli/
According to iSuppli, through Engadget, the iPhone's peers cost :
Palm Pre : $138
Blackberry Storm : $203
Tmobile G1 : $144
iPhone 3G : $174
So, the iPhone 3G S falls right in the pack. Cheaper than the Blackberry Storm, but more expensive than the Pre or the G1 to make.
The last time I checked, you can get a Palm Pre for $199 with contract, and you can also get an iPhone 3G S for $199 with contract. The data plans are different, but that's more the carrier's fault...
See? that's the problem of iphone fans they think what i listed is a dream......
what i listed is real and can be bought already in many shops near me and all over europe/in USA very soon (omnia hd)
Search about Omnia HD/Sony ericsson Satio/etc then come and tell me these phones is "dream"
House, I called you out for your lack of thinking. They don't just order random parts and then put the phone together. It has to be engineered, amongst many other things that aren't free.
Taking the price of an unlocked iPhone and deducting from it the build cost and then going on about a 620$ Apple logo is just absurd.
I'm a fan of WinMo and Android and would NEVER buy an iPhone, but think for two minutes before ranting.
What make you think I'm ranting here? cause I'm not
Engineering iphone? you got to be kidding me its the same since 4 years ago when it was revealed
Apple clearly stated many times there work is on the software mainly not the hardware and they didnt get copy/paste for the original iphone till few days ago and these people been waiting for only 3 years for this software update
iphone is mass production phone unlike nokia/SE etc which create many different phones so the cost for them is way higher specially when you look the hardware
And stop kidding yourself thinking engineering cost that much the phone costs less than 200$ and being sold for 800$
that's 4x the price but its fine for apple they KNOWS that people with half a brain wont get an iphone because many phones is GENERATIONS ahead of it hardware+software wise so they ask for the high price that apple fans is willing to pay and make them pay it every year with small trivial upgrade
I am aware of the Omnia HD. I will admit that it is a great phone... but where is the carrier support in the US?
What if i don't want to buy unlocked and pay so much money? What if i want to pay $200 plus enter a contract for cell service I was getting anyway?
In the US from the major carriers, the choices were what I listed before. Pre, Blackberry storm, G1, mytouch 3g, or the iPhone.
Why don't you hate on the Pre, the blackberry, the Tmo android phones? Have you heard that Palm is charging $850 unsubsidized for the Pre? Where were you to blast Palm for this move?
http://www.engadget.com/2009/05/25/best-buy-lists-unsubsidized-regular-price-for-palm-pre-at-850/
Just as an aside... the Omnia HD uses the same processor as the iPhone 3G S. Both are based on ARM Cortex A8, clocked around 600Mhz. The Omnia does have more capability now. You are right about that.
See, Apple gives you a lot of bang for your buck, this is to all the haters out there!
Please don't tell me you actually think the iphone costs 200USD....
in other words att/apple rapes its customers.
Oh whatever, as if there's anything that's intentionally sold at a loss (besides the PS3, which is killing it anyhoo).
Just buy some Apple stock, and these stories will only put a smile on your face.
Yet, you're still jealously reading every iphone story, desperate to make a comment that hasn't been made 1000 times before.
Fail
N97 $700
HTC Touch Pro 2 $800
xperia $600 ish
G1 $400 (lol?)
And our greedy, left wing, big government adds 22% of the cost to the goods you buy because of taxation/fees on businesses...then you have to pay a sales tax on that government induced price increase.
The harsh words and hurt feelings just prove my point. People should not be getting all bent out of shape because someone else doesn't like Apple or the way they needlessly over price their goods. There is no reasonable reason for people to behave poorly over a company that they have no vested interest in. Mainly because Apple is not going to come to any ones defense if the roles were reversed. It's not a symbiotic relationship. It's a parasitic relationship. It would be put in the unhealthy relationship catagory. I'm sure someone will have issue with my words, and reply in poor behavior. Thus giving prime example to my point. Come on people grow up and get some perspective.
It doesn't help that apple-haters act as douche-like as the people they claim are douches. I mean, seriously, the apple haters go around with this smug air and sense of superiority at least as thick as the one they describe coming from people who buy apple products (which I have yet to truly notice from any of the people I know that use an iPhone or any apple product for that matter.)
I think they're projecting, however. Apple is truly hated because they're -successful-, and engadget comments slide into /g/ level territory.
Everyone always gets bent out of shape when iSuppli tears down an Apple product, and yell, "APPLE SUCKS. APPLE IS OVERPRICED!!!!"
But where are they when Samsung or LG or Palm or Motorola, or Nokia, or RIM come out with a cell phone that (unsubsidized) costs $600 or more?
This is standard practice in the cell phone industry for every single device. The real cost of the phone is hidden from you, and yes, ALL of the manufacturers make a tidy sum of money when they sell a phone to the carrier and the carrier sells it to you + a contract. How is this news? How is everyone outraged just now?
Apple isn't doing anything different from the dozens of other handset manufacturers out there!
iRoc: The price of the 3GS is $199, same as the Pre. Is that overpriced in your eyes as well?
And the converse of your argument is valid too... People should not get bent out of shape because someone else DOES like Apple. As in, "Why get so negative about a company when it really has nothing to do with you at all?" It's in the 'unhealthy category.' Grow up and get some perspective. Your condescending tone is grating.
I am a PC builder and user with an iphone. I cannot believe the tech blog community bashes this phone. It may not have any different cosmetics to please that crowd and even I would have liked to see a different case or front camera.
but...
This thing is SO much faster than my 3g.
I was very disappointed upgrading from the 2g to 3g. The network let me down most of the time and I saw little to no speed increases.
I see substantial gains in every aspect of speed on the 3gs phone. Side by side to my wifes 3g it is really not subtle.
Less subtle than when I build a new pc for small gains in performance.
I do not get the hate.
Now can you put it back together?
LaughingMan here is the reality I live in. Before the release weekend was over At&t bumped upgrade dates for a huge number of customers. Those that they and Apple saw as most likely to take advantage of this upgrade advancement. AT&T did nit come to this alone Apple played a part. Apple saw that alone the 3G S was not going to be the market grabber as the two previous models. One can site as many analyst as one wants, but what's going on is Apple and AT&T are trying to give it away. You don't suddenly drop the price for no reason, and allowing those not really eligable to get the subsidized price. Apple and AT&T are both still making profit off the subsidized price. Don't confuse facts with what people try to get the masses to beleive. It wasn't the public outcry that changed the tune. It was "Oh pooz we ain't gonna move as many of these as we expected! We better do something to get this train of crazy rolling again!"
I see where you are coming from, but I can't help but feel like you're playing armchair quarterback.
You say you don't want me to confuse facts with what people are trying to get the masses to believe, but what you are offering isn't fact either... it's speculation as well. You're speculating on internal Apple and AT&T discussions on projected sales that (unless you are an Apple or AT&T insider) you don't have access to, and shouldn't be disclosing even if you do.
All I'm saying is that you seem to be stretching to spin 1 million sales in a 3 day period in the middle of an economic recession a failure.
Your theory is plausible, but unprovable, but the facts are facts... there are 1 million more iPhones out there than there were just a few days ago.
I agree with you that they can't keep doing this every year, but I'm also a huge proponent of the downfall of the carrier's strict control on the whole process. I hate dealing with AT&T, and consider them dishonest in their pricing and restrictions.
That being said, I didn't jump from an iPhone 3G to the iPhone 3G S. I skipped over the 3G last year and have been using my original iPhone for 2 years. The new features in the S make for enough of a reason to upgrade for me, and I have no regrets.
Awe a lil too much truth in that last submitter comment mods? What ever I'll let you wonder what truth the mods see fit to save your poor selves from, but I will say that I never once said the iphone was not worth $334 the subsidized price in most places. That's with tax and what not. I said it is worth that price, but not worth the $700+ they ask other wise. get the facts straight before you step, and stop fighting those smart enough and brave enough to speak up for you. When your too awe struck to even care that you are being bamboozled.
Look the truth of the matter is this. The real value in the iPhone is not hardware it's in software. The R&D for that is minimal being as it's a port of OSX. The really real value of the iPhone comes from those outside of Apple. The Code Monkeys that pay Apple a fee to even be considered entrance to the App Store. Then pay again for each sale. Let's say out of 50k apps 45k are from devs that one have one app. That's 4.5 mill alone to Apple for nothing well for two minutes of face time more or less. That does not take into consideration those devs who's apps were denied, and sometimes just cuase Apple says so. Then there is the whole OS86x issue. You own a mac with an intel CPU don't thank Apple. Thank the code monkeys that made that possible. They didn't get huge bonuses and royalties. No they were told ok great now cease and disist. You like that your new 3.0 has video thank DreamCatcher and saurik. You like the new copy and paste don't thank Apple thank the devs that worked on it and got it right for Apple and were giving it away for free in Cydia. You like landscape text and email don't thank Apple it was free on Cydia first. Apple routinely takes advantage of open source, and then slams the door on said open source.
@LaughingMan I agree 98%
I have no issues with AT&T save for the fact they haven't givin' me my MMS or Tethering yet. I have a 1st gen and a 3g, and now ordered a 3G S and the two 3G models only cost me $334. The reason why is because I know trying to skimp on my monthly plan only ends up costing me more. That's why I go straight max unlimited plan every time, and that's why AT&T chose to give me an early upgrade. Plus my family bill is always one price. That's smart financial work in this economy You can not save when you do not know how much you will be spending next month or six months from now. Look if people buy generic they are only holding themselves back, but still I'm not gonna pay 50 bucks for kraft mac and cheese, because it's not worth that. A million units first weekend is great, but it's not as press worthy. Those that bought opening weekend were going to buy no matter what. They were devoted to it, but the lack of gang buster lines makes it look like the 3G S just isn't as great as the two previous models short. Thus the upgrade bumps to get those people they know are top shelf consumers to come in and get a plate. Nothing draws a crowd like a crowd. Both Apple and AT&T had to do something to bring in the apex preditors that they know will eat if it's in the water. Even a small extended feeding frenzy looks bigger than none at all.
You have too look at what that move says. It says "Oh we know our product is not really worth that unsubsidized price, so we'll give it to more at the lower price to get the hype back up." It's basic marketing. Sometimes you have to chum the waters
My point is simply NO PHONE IS WORTH $700, and I can make triple that in a day easy. There were many times I had the cash in my pocket and wanted a 1st gen iPhone, but just refused to pay that price. So the 3G came out and I was willing to pay the $334 because that is worth it. With that said it should be obvious that all iPhones should not cost more than $334, and the subsidized price should really be the lower price AT&T pays for it in the first place. Quadrupling the price and then knocking some off is not giving people a deal. It's price gouging. Oh, and yes I understand that someone should be allowed to set their own price, but with in reason. Don't expect the next guy to cover your over head on everything. My last point is don't defend the guy that's taking you for a ride like a used car salesman. There's only 2 reasons a person gets ride of a car 1. it's a piece 2. they have enough money and want everyone to know that they did in fact sell a practically brand new car to get the newer one. That falls into the douche category, and the trying to impress others by having the newest of the new.
People need to relax and take a step back. I don't think Apple should be giving them away for cost, just not bending people over is all. There's only two ways one can protect themselves from it. 1) don't buy one, or wait til they can get it for a reasonable $334 or 2) become an apex predator and then they will reward you and try to keep you happy. Excuse me for trying to look out for and help out those less fortunate than I.
I mean whats the exact percentage of those new 1 million units sold that were $99 3G's and what percentage were sold at full price? I bet the least of those is the full price units sold. It's just common sense to say "Hey hold up, 700 mohonkin dollars!" I bet if I were saying "Hey 300 bucks for a 8gb flash drive is a bit much!" but being it's an iPhone instantly I'm a hater. It's not the game it's the unethical and lopsided fashion with which the player is playing the game.
I'm gonna boil it down for ya. I can take that $700 buy a new vinyl cutter and make a half a mill off it before I even have to think about buying a replacement. Yet spending said $700 on an unsubsidized iPhone that will continue to cost me through app purchases is not a wise financial move. Though $334 iPhone is at least understandable. that's all I am saying. Someone has to look out for the little guy, someone has to.
Iphone 3GS is a rip off. Take your money somewhere else.Go for htc hero instead.....
Yeah. Still eating up that "subsidized" bullshit?
Not just apple, every cell phone manufacturer. Pretty damned sick of it myself.
And all the "miscellaneous fees" in the world aren't going to bump up the cost to 3 times the price of the hardware.
These are just variable costs, which like many have already pointed out might be even wrong as Apple has certainly deals with preferred suppliers.
Then there are fix costs: those that go directly into R&D and product development, then there
- overhead costs (G&A)
- additional budgets including marketing and sales
- assets (who pays the Apple shops?)
- ...
The calculation done by iSuppli refects in no way the reality of the investment and cost structure.
I wonder what the gross margin is on this kind of equipment. Anybody from the industry has a clue?