So what do you do if a new product like the iPhone 3G is released? Well if you’re iSuppli, you go ahead and rip it apart to perform a “teardown analysis” of course. It’s almost a tradition now to hear what a significant product costs after it’s been introduced into the market and the iPhone 3G is no different here. According to iSuppli, the new 8GB iPhone 3G is approximately fifty dollars less than the 1st generation iPhone. Initial production costs for the iPhone 3G is estimated to be at $174.33 (this consists of the iPhone’s 3G bill of materials and manufacturing expenses. It does not include costs such as software development, shipping, packaging, accessories that go with the phone, marketing etc). Compare this number to last year’s number of $227 and yes.. the company did indeed shave dollars off the manufacturing process. This isn’t too surprising since the major upgrades to the new iPhone are the 3G support and the inclusion of GPS. Going to a plastic backing, and sticking with the same panel has allowed Apple to focus on reducing overall costs of the iPhone and thereby increasing sales margins.
iSuppli estimates that profit margins for the new phone will be around 55 percent. How did it get this number? Here’s the breakdown:
Apple manufacturing and bill of materials costs for 8GB iPhone 3G: $174.33
Apple pays $50 dollars for IP royalties
AT&T is estimated to be paying a $300 subsidy per 8GB iPhone to Apple making the 8GB actually worth $499 ($199 + $300).
Thus $499 - $224.33 = $274.67 which is a 55 percent profit margin. NICE
If you’re curious as to the components found in the phone - make sure to check out the iSuppli webpage here.
[Check it out via Crave]
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