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Saturday, June 27, 2009

Wonder how much the iPhone 3G S really costs?

The new Apple 3G S costs just a few $$$ extra to Apple even after several upgrades from the iPhone 3G. iSuppli, the company known for tearing down gadgets and then estimating the cost of each component one at a time, has estimated the cost of new iPhone 3G S to be $179. Which means that the new iPhone costs Apple just $5 more than the iPhone 3G.

The 16GB iPhone 3G S costed $172.46 with a manufacturing cost of $6.50, making a total of $178.96 per handset. Though the cost given by iSuppli does not include other costs such as the cost to develop iPhone software, royalty paid, packaging & shipment, advertisements & promotions to name a few. However AT&T pays quite higher to Apple than $199 offered price tag offered to the customers. AT&T covers up the cost with the subscription cost and service revenues for the contract period.

"From a component and design perspective, there's also a great deal of similarity between the 3G and the 3G S," said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. "By leveraging this commonality to optimize materials costs, and taking advantage of price erosion in the electronic component marketplace, Apple can provide a higher-performing product with more memory and features at only a slightly higher materials and manufacturing cost."

The new iPhone has double the memory than that of the iPhone 3G. Apple has also upgraded the camera to 3.2Mp and some additional components like the magnetometer for the inbuilt digital compass. Toshiba sells the most expensive part of the new iPhone 3G S, the NAND flash memory at $24. While the cheapest part comes form Cirrus Logic which is the Audio Codec.

Looking at the iPhone 3G S sales and the profit Apple makes via the ATT kickbacks, we should be buying AAPL :)


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