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Analyst Chris Whitmore with Deutsche Bank believes Apple achieves a bill-of-materials cost of $170 for the 16GB iPhone 4S, and $220 for the 32GB model. For the new 8GB iPhone 4, he thinks Apple's materials cost is about $140.
"This suggests manufacturing margins on the iPhone 4S are 71-73% (vs. ~38% for iPod touch) and should support attractive corporate margins for AAPL for multiple quarters," Whitmore wrote in a note to investors on Monday.
Apple also achieves a greater dollar subsidy from its carrier partners for iPhone purchases. The 16GB iPhone 4S subsidy is estimated to be $450, while most competing devices are estimated to garner less than $350.
Those subsidies allow Apple to reach a $199 price for the 16GB iPhone 4S with a new two-year service contract. That's in line with competing 3G devices, and about $60 less expensive than 4G phones like the Samsung Galaxy S II ($229 with contract), Droid Bionic ($299) and HTC Thunderbolt ($249).
"We expect customers who do the math to opt for the iPhone," he said of the price of the iPhone 4S, along with monthly service fees. "In addition, those who don't do the math will likely reach for the lower upfront acquisition cost of the 4S compared vs. these Droids."
Preorders for the iPhone 4S began last Friday, with carrier AT&T announcing that day that it sold 200,000 handsets in the first 12 hours. That makes it the most successful iPhone launch ever for the carrier, which is the second largest in terms of subscribers in the U.S.
The initial iPhone 4S stock was quickly depleted by early Saturday morning. Customers who now order Apple's next smartphone are now quoted an estimated shipping time of one to two weeks.
Whitmore believes the iPhone 4S will keep Apple the "smartphone gold standard," and will allow it to keep the largest share of smartphone sales versus other hardware vendors. Deutsche Bank has reiterated its "buy" rating for AAPL stock, along with a price target of $530.