Comments on: Apple iPhone 3GS: The sum ($) of its parts

iPhone 3GS carries $178.96 bill of materials and manufacturing cost, iSuppli teardown reveals.

[Splashes]

A couple of points, which should be entirely obvious, but based on the vapid comments following every article citing iSuppli's numbers, apparently aren't:

1) iSuppli's numbers are simply educated guesses, not definitive.

2) Cost of hardware is not identical to the manufacturer's investment. Not included are design, engineering, software, UI development, marketing, packaging, shipping, and more.

[solitare_pax]

All very valid points here. How much does it really cost if CNET or iSuppli factors those inconvenient facts in?

[camp88]

@Splashes,

Good point. So if one were to include R&D, engineering, software, UI development, distribution, holding inventory, retailing, marketing, product warranties and returns, etc, could one assume (with these additional costs being at least ten percent of the manufacturing cost--just a guess) that the all-in costs are at or above the actual price to consumers?

[ender21]

While their existence is fact, CNET and iSuppli would likely be making *uneducated* guesses surrounding those numbers, since there are no parts to point to and the costs are probably very fluid, not to mention tightly guarded by Apple.

[a3th3r]

@ splashes
Manufacturing costs were included (estimated at 6.50 USD per unit). Marketing, R&D, and engineering costs are depend on the total number of shipped units to calculate on a per unit basis, so naturally as time goes on those costs would become less significant.

@ ender21
If you take apart the device there will be identifiers on the original part that would signify the part number and manufacturer. From there it would be rather simple to determine the cost. With the volume Apple purchases they may be getting the parts cheaper than the above listed prices.

[Yardstickman]

The REAL story is how much does it cost AT&T to provide its service....

[Thomas, David]

agreed ... moreover ... as everyone seems to forget, Apples original deal didn't even have AT&T in the picture. CIngular and Apple has a 2 year deal, and Cingular was far more forward thinking than AT&T. AT&T came along and somehow convinced (bribed with a tremendous amount of money) Apple for a five year deal. Which by now, EVERYONE knows as a very bad deal.

This device was only envisioned to be tied to one provider so it could mature. It's done that This five year deal with AT&T was like Apple selling it's soul, and everyone else's pent up desires to the devil incarnate (AT&T). Locked phones are bad. We all understood a totally new device it was necessary. But that is way over now.

[camp88]

This is the real question, most certainly.

The answer, moreover, is going to be highly dependent on the volume of customers. With every additional customer, service costs per customer go down.

More specifically, it'd be interesting to know what Apple's actually done for AT&T to lower it's average cost per customer by a) lowering its customer acquisition costs, increasing its customer retention rates, and decreasing its service costs per customer by substantially increasing the volume of its customers.

[MRXBOX n VAN BC]

When the I~Phone is unleashed on a Super Net ! It will become the #1 gamer platform ever ! In the World Ever !! Who am i 2 say this , MRXBOX n VAN BC , XBL'S #1 FANBOY !! I might get banned from my Fav XBL sight , but i said the say thing there !!!

[Sausagebiscuit]

Let me be the first to say... LOLWUT?

[shellcodes_coder]

Apple tax

[dansterpower]

Huh? ATT pays Apple's profit.

When you add in costs besides the BOM (build of materials) -- and these are real, hard, costs such as R&D, Testing, Marketing, Operations, HR, etc, the phone costs significantly over $199, the price it sells for with a 2 year ATT contract.

[aMUSICsite]

Apple Tax or Reasonable markup?

[Perry_Clease]

" aMUSICsite June 25, 2009 2:34 AM PDT
Apple Tax or Reasonable markup?"

Shell is a troll. Anyway I pay the Apple tax so that I can compute in a nice neighborhood. Those that don't pay the tax compute in bumtown which is rife with ugliness, fear, and shoddy. However, whenever there is a story about Apple or Steve Jobs they show up in AppleTown and hang around until the police dispatcher sends a squad car to investigate a 5150 laying in the gutter

[kool_skatkat]

Apple Tax, Palm Tax? $199 for *G vs $99? Or 8G vs 16G for the same price?
Somebody talked about the Pre being much faster than the iPhone? Any correction been issued?

[ckh1272]

Most of speed issues between the two are dependent on the network of course, but a recent CNET video showed that the Pre was seconds faster at loading a webpage, and sending out an pic attached text. However the iPhone booted up a minute and half faster than the Pre. They are on very similar hardware, so performance seem to fall more on software and network speed (which will vary from region to region).

[dansterpower]

The iPhone 3GS is significantly faster than the Pre at both browsing and perhaps more importantly in Javascript performance.

See:

http://www.medialets.com/blog/2009/06/24/speed-test-iphone-3gs-even-faster-than-apple-claims/

http://anandtech.com/gadgets/showdoc.aspx?i=3587

The CNET video shows the opposite on browsing but the above two test refute the CNET Results

[pithenumber]

@danster
it depends on the network

if the data get to the Pre much faster than it gets to the iPhone, no matter how fast the iPhone renders, its going to be slower

[camp88]

The Pre's speed (or lack of speed) is hardly germane when one considers that there's but a handful of apps for the Pre and over 50,000 for the iPhone (the software development, veting, and distribution costs for Apple are perhaps the most grievous omission on iSuppli's part).

Simply put, one hardly has to worry about the speed of the Pre if there are, comparatively speaking, so few applications for which it would be used.

With Apple's design and engineering consumers get world-class quality. With the app store they get unrivaled quantity (and quality). Frankly, I don't see how the Pre's speed matters all that much--not that it even is faster, at any rate. It's like comparing the speed of a fast food drive-thru that only offers six meals with a commissary that offers every conceivable local and exotic dish.

[ralfthedog]

I can talk much faster on the iPhone.

[sev7en2507]

Well, thank you for this article but as far as I read there's something of strange about the 256Mb onboard. Where did you see the lost 128Mb?


Thanks, sev7en

[Tedders85]

I noticed there was a mention of 512mb mobile DDR. I thought the phone had only 256mb? Correct me if I'm wrong.

[amit_kumar13]

I understand hardware cost may not always add up to the total cost of a product and will need addition of software, operating system and such cost and not to forget the profit margin... but some one is questioning if this is the real manufacturers cost... when buying these items in bulk these costs would almost be slashed to half of what is mentioned and even these prices may be overstated...

My counter argument for what ever be the cost ... look who is cribbing about it... we especially in US who pay $60 an hour for labor for changing a $25 engine part? ... why is labor cost not being included... did these items get assembled by themselves? the factory assembling them would be also a cost and there is a cost to quality to... ever heard of quality assurance? all these add up with a thousand other things and would surely be higher than jut $179.... we are trying to hype up just a BOM here without knowing the actual cost involved.

[codynews]

They do list the assembly cost, at an amazingly low ~$6

Also, the prices of the components listed are guesses BASED on the expected volume and subsequent discount.

[ender21]

As stated, the actual costs can't be known fully. But, assembly would be cheap since it occurred in China!

[Jaxon024]

Where is the battery in this list?

[pithenumber]

is it Apple tax or AT&T tax?

[CreativeMalcolm]

Keep in mind ATT also needs to pay their staff. People forget that every time they call into customer service to ***** about the fact that they're lonely and went over their minutes that costs the carrier money.

[ZeTron57]

Costs ATT money? It costs around .001 cents per minute of air time usage. please... Overage charges is where the company makes a huge % of their profits... granted every time you call ATT help line you cost them an average of over $14.

[thelemurking]

I'm curious about the FM aspect of the wireless chipset. I'd love to see that enabled!

[kth262]

The FM is for the Nike + ipod feature. The sensor that goes in your shoe transmits an FM signal.

[ballmerisanape]

I thought it was bluetooth.. because if that's the case.. my iPod touch has an FM transmitter too.