The US $173 iPhone 3G cost estimate from iSuppli – that’s cheap!

By Alex Zaharov-Reutt
Wednesday, 25 June 2008 12:57

Mobility

Market researcher iSuppli has delivered its first estimate of iPhone 3G construction costs purporting to show just how it is Apple has been able to cut upfront iPhone costs so low. But iSuppli haven’t finished yet – once they get a real iPhone 3G, they’ll break it apart and do the cost calculations again!

iSuppli is a well known market research firm that has delivered iPhone cost estimates in the past, pulling them apart, pricing the individual chips and components, and delivering a “bill of materials” list to divulge a likely construction price.

Given iSuppli’s strong contacts in the manufacturing world, and given a range of details leaked about the iPhone 3G and already known, in addition to the knowledge of what is in the first generation iPhone, an educated guesstimate isn’t hard for iSuppli to make.

PC World has the details of iSuppli’s findings, which indicate that the touchscreen now costs US $20 and is the second most expensive part of the iPhone’s parts cost, with the and 8GB of flash storage (NAND memory) the most expensive part at US $22.80.

There is no breakdown in PC World’s article for the rest of the components, such as the case, the battery, the buttons, the headphone socket, dock connector, the CPU, the chipset for communications, audio, Wi-Fi, Bluetooth, GPS, the antenna and more, but iSuppli says these components add up to US $164.

Assembly costs US $9, and if you add those two figures together, you get US $173. iSuppli also promise to take an iPhone 3G apart when they launch on July 11 to do the breakdown again, this time knowing exactly which chips were used and seeing the components to make an even more educated estimation.

And, As iSuppli states, this raw bill of materials cost does not include “the cost of software development, shipping, distribution, packaging and accessories included with each iPhone.”

Surely, these all add to the cost. You have a headset with microphone, the USB cable, the power adaptor, a basic manual, the plastic packaging within, the box itself and the other costs to consider.

And all those things add to the iPhone’s price. Yet the iPhone 3G in an 8GB configuration only costs US $199 upfront.

Why is it so? Continued on page 2.