Monday, June 23, 2008, 03:25 pm PT (06:25 pm ET)
iPhone 3G saves Apple over $50 per unitEven with the newer technology inside iPhone 3G, Apple has managed to trim the price of its handsets by over $50 and is making even more profit on each sale, according to a new cost breakdown by iSuppli.
The supply analysis group estimates that the raw cost of parts and assembly for a stock 8GB iPhone now costs Apple $173, or $53 less than the $226 it first cost Apple for the earlier cellphone.
Much of the breakthrough comes through leaving many existing components intact. While the Infineon 3G chipset and the Broadcom Global Locate GPS unit are new, the Samsung processor, flash memory, and numerous other parts are the same as for the 2007-era iPhone, more than offsetting the price increase that stems from the addition of 3G and GPS.
"They [at Apple] have done a good job in using what worked well with the first one and making improvements where it mattered," says iSuppli analyst Jagdish Rebello.
Although some fees can't be escaped, including $45 in royalties to Qualcomm and others for a 3G license, the savings are said to give Apple roughly $281 in profit with each phone's estimated full, pre-subsidy $499 price — or a more than 56 percent profit margin.
This doesn't, however, include shipping, sales, and the cost of bundling pack-in devices, according to the study. Apple's actual profit from each device is anticipated to be less, though the 16GB model is believed to be more profitable as the extra memory adds just $23 to the cost despite the $100 boost to the retail price.
Apple's cost reductions should also get steeper as time goes on, iSuppli adds. Apple's price to build an iPhone could drop to $148 by 2009, extending the electronics maker's margins even further ahead of the next major iPhone update.
AppleInsider should have more information soon.
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