IPhone Parts Cost About $200

[Farid]

http://www.informationweek.com/story/showArticle.jhtml?articleID=200900025

People who are starting to feel uneasy about the price they paid for their iPhone may soon become despondent when they find out that a teardown analysis indicates that the cost of materials to make the fancy device was about $200.

Analyst firm Portelligent on Monday said a quick study of the device indicated that the cost of components was about $200 for the $500 iPhone, and about $220 for the $600 phone. The prices for materials, however, are initial estimates. "When we finish, we will have less of a guesstimate and more of a solid estimate," Howard Curtis, VP of global services for Portelligent, told InformationWeek. "It'll take a little time."

The research firm tore apart the iPhone, which Apple launched Friday evening with lots of fanfare, mostly to determine which companies have the bragging rights for getting their semiconductors and processors into the high-profile device.

"(The iPhone) has gotten an enormous amount of buzz, and from an initial look inside, we think it's a very interesting product," Curtis said. "There's a lot of interest from the standpoint of bragging rights."

Do you hear that sound? That's Steve Jobs laughing all the way to the bank.

 

[Simon F]

http://www.informationweek.com/story/showArticle.jhtml?articleID=200900025


Do you hear that sound? That's Steve Jobs laughing all the way to the bank.

Using that logic, Windows should be given away free as the cost of hardware is 0.

 

[[maven]]

Simon, don't forget the DVD...

In any case, I think that in this case R&D must've been immense. You don't come up with a new UI paradigm that polished over night, with all that that implies...

 

[Magallanes]

Hi to everybody.

While parts can cost $200 (hard to believed for many custom parts or any prior and without knowning confidential information), the r&d was really expensive, think that we are talking about a new team creating a new cellphone, not a old team creating a variant of a existent phone (like SE, Nokia, Samsung and such).


Anyways this kind of analysis usually are far away of the reality, for example OLPC $100 notebook the final released was of $140 (%40 higher) and with less features.

 

[GLX]

Selling Price = $599

Parts (third party est) = ~$200

Assembly cost = ?

Original software dev cost = ?

Ongoing software dev cost = ?
(iPhone is going to get updated over time)

Packaging cost = ?

Shipping cost = ?

Assuming that the estimate is correct and you could buy the parts for that price, they wouldn't do much sitting on your work table without some of the other efforts described above.

SJ is probably still laughing all the way to the bank, that's what happens with hit products, but probably not to the tune of a net 55% profit margin in this case.

 

[Davros]

Simon, don't forget the DVD...

You don't come up with a new UI paradigm

and they didnt................

but back on topic
when you buy an iphone arnt you locked into a contract with a carrier ?
in that case you should be paying less than cost price (possibly even free)

 

[Mintmaster]

BTW, Apple is getting a lot more than $599 for each phone. You're not being tied to ~$1000 of AT&T contract for nothing. That's the only reason I'm not getting one.

I'm pretty shocked that there's such a low cost estimate for a device like this. Does that mean other smartphones cost under $150 in parts, and have a fraction of the R&D overhead that the iPhone does?

 

[Davros]

Apparently unlocking your phone (so you can use it with any carrier) is now legal in the u.s
as it is in the u.k

 

[tongue_of_colicab]

Hi to everybody.

While parts can cost $200 (hard to believed for many custom parts or any prior and without knowning confidential information), the r&d was really expensive, think that we are talking about a new team creating a new cellphone, not a old team creating a variant of a existent phone (like SE, Nokia, Samsung and such).


Anyways this kind of analysis usually are far away of the reality, for example OLPC $100 notebook the final released was of $140 (%40 higher) and with less features.

What i've heard of it they hardly use any custom parts, all normal stuff. Even if they used custom parts that still doesnt mean it has to be expensive.

Also I dont think r&d are that much higher than for other phones because in the end the iPhone really is nothing more than a phone, its not a 180 turn from other phone's. They just gave it a apple package and because it has apple on it they can charge a fortune for it.

 

[wco81]

Remember, they're suppose to be rolling out new features through software updates.

So there's ongoing overhead for R&D/SW development.