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The iPhone, of course, is more than the sum of its parts, but the cost of individual components adds up--to $178.96, to be exact.

A new analysis by iSuppli details the cost of the iPhone 3GS and the motley collection of chips inside.

The entry-level (16GB) version of the iPhone 3GS carries a BOM (bill of materials) cost of $172.46 and a manufacturing expense of $6.50, for a total of $178.96, said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli, in a statement.

Apple iPhone 3GS major components and cost drivers

(Credit: iSuppli)

Service providers are paying more for the low-end iPhone 3G S than the original iPhone 3G, according to Rassweiler. "Although the retail price of the 16GB iPhone 3GS is $199, the same as for the 8GB version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions," he said.

And what are the major cost drivers? The 16GB flash memory chip is the priciest at $24--and reflects the rising cost of flash chips due to supply constraints, according to iSuppli. This part is also available from Samsung. So there could be some second-sourcing (sourcing the part from a second chip supplier) in the future.

The next rung in the cost ladder is the 3.5-inch display module and touch-screen assembly, at $19.95 and $16, respectively.

Below this, is the main Samsung applications processor. Priced at $14.46, it is the fourth most costly component in the iPhone 3GS. ... Read more

Though everyone knows the iPhone OS 3.0 brought welcome and long-awaited changes like multimedia messaging; a landscape keyboard; and cut, copy, and paste, there are a host of other tweaks from the software update that Apple has not publicized. According to Apple, the update offers 100 additions to the iPhone, but we covered just a handful in our iPhone 3GS review.

What other features are new? Well, a week after Apple released the update to the world we have a better idea. We've done our own exploring, but last week we also asked for your help in finding the update's hidden treasures. Thankfully, you responded in force, so we're glad to offer you this list. It's still not complete, so we'll be adding more as we (and you) find them. (Note: I've only included features not listed in the review.) Also, Apple has posted a handy chart detailing which OS 3.0 features are available on the iPhone Classic and iPhone 3G.

AT&T is upgrading its network and using 850MHz spectrum to beef up its 3G wireless network, which should help alleviate dropped calls and slow network connections for iPhone 3G and iPhone 3G S users.

Apple said this week that it sold more than a million of the iPhone 3G S model worldwide this past weekend after the phone went on sale Friday. Exactly how many of those phones were activated on AT&T's network in the U.S. isn't yet known, but the addition of more data intensive iPhones is likely to put a strain on the carrier's network.

That said, AT&T spokesman Mark Siegel told the blog Gearlog on Tuesday that the company is ready for the onslaught of new iPhone users. One of the things it has been doing to prepare is upgrading its network so that it can offer 3G wireless service using its 850MHz spectrum licenses. For the most part, AT&T has been using spectrum in the 1900 MHz band to deliver its 3G services, which have become saturated, Gearlog explains. This means that as AT&T sells more 3G devices, such as the iPhone, it has been cramming more users into an ever more crowded spectrum band.

This could explain why some users have complained of dropped calls and slow Net connections using the iPhone 3G, an issue that CNET News pointed out nearly a year ago after the iPhone 3G was launched. The problem has been particularly acute in large cities, such as New York and San Francisco, where there is a concentrated base of iPhone users and where the 1900MHz spectrum is predominant.

Siegel says that upgrading equipment to allow AT&T to use its 850MHz spectrum for 3G services should help relieve some of the congestion issues. Because the 850MHz spectrum is at the low end of the frequency band, it is able to travel longer distances and penetrate walls more easily than signals on the 1900MHz band.

When asked about problems with dropped calls for iPhone 3G users a year ago, Siegel told CNET News that the company had been working to expand the portion of its 3G network that runs on the 850MHz band. Back then he downplayed the need for adding 850MHz spectrum for 3G services by saying that it "doesn't mean you can't get a good experience on 1900MHz."

Now Siegel thinks that adding 850MHz will make a big improvement, according to the Gearlog story.

"The 850, when it's turned on in individual markets, people notice a big difference," he is quoted as saying.

In addition to adding 850MHz 3G service, AT&T has also been making other improvements to its network, such as upgrading to the next iteration of HSDPA technology, which is expected to double download speeds on AT&T's network.

If you're lucky, you might be able to pocket as much as $200 in profit on your old iPhone.

If you're among those lucky few who are eligible to upgrade to an iPhone 3G S without paying full retail pricing, here's good news: you can sell your old iPhone 3G and walk away with some extra cash.

Let's say you have the 16GB model. A quick check of Craigslist and eBay shows that the going rate for a mint-condition 16GB iPhone 3G is around $400.

Now, it doesn't take a math whiz to figure out that if you buy a 16GB iPhone 3G S for $200, you'll walk away with a $200 profit. Grab the 32GB model and you make $100. Not too shabby, eh?

Of course, with the sudden glut of used iPhones out there, you may have a tough time finding a buyer. If you'd rather not deal with the hassles (and potential wait) of selling to another individual, consider selling to a service.

iPod fix-it shop Rapid Repair, for instance, has an iPhone buyback program that's currently offering $230 for an 8GB iPhone 3G and $270 for the 16GB model. It'll even pick up the cost of shipping.

I also got an online quote from used-gadget buyer NextWorth, which offered about $220 for my 16GB 3G.

Used-gadget buyer NextWorth will give you a decent price for your used iPhone 3G.

Sadly, I'm not eligible for upgrade pricing until 2047, or something ridiculous like that. (Thanks, Apple!) So I haven't been able to put any of these methods to the test. If you have, be sure to leave a comment detailing your experiences.

If you do decide to sell your old iPhone, here's some advice from resident forensics expert Jonathan Zdziarski: 1) Pull the SIM card. The new owner won't be able to use it anyway. 2) Erase the phone by tapping your way into Settings > General > Reset > Erase All Content and Settings. Make sure to keep the phone plugged in, as this process can take a couple hours to complete.

The iPhone 3G S launch is well under way, and AT&T made a big deal this week with a capitulation to iPhone customers under contract (click the link for the CNET story). It promised that some 3G customers who would normally be upgrade-eligible later this summer (June, July, August) will finally be able to get their 3G S now for the new-contract prices of $99, $199, and $299.

It was a nice promise, but were you able to take advantage of it? I ask because I bought my 3G last August 31, and I pay more than $99 a month on my bill--a prerequisite according to AT&T's news update. However, after half an hour spent on the phone with customer service managers, I discovered that what I had been told on AT&T's Web site and via text message was still true: I don't qualify until 1/31/10, which is more than halfway toward the release of the next iPhone after this one.

Moreover, AT&T wouldn't specify what, exactly, determines whether a customer gets a 12-month or 18-month upgrade window. Even their official message remains gray on the matter. To make matters even more inexplicable, the manager said it was "Apple's decision," and that I needed to spend more than $99 a month just on my voice plan, not including data (required with every iPhone contract) and texting. On the other hand, our editor in chief, Scott Ard, told me he was successful, and that he was a 3G owner who had been eligible late July. What was the magic powder that sealed the deal? He's been with AT&T longer than I have, which may have helped.

Sound off: did you get an upgrade? Were you denied? Was it a pain to do, or remarkably easy? Let us know. At the least, I can feel sympathy in numbers (and wonder why I'm so excited about spending so much for a faster chip, a video camera, and a compass). For more on my AT&T rant, check out this week's Digital City podcast when it goes live.

First iPhone 3G S buyers emerge from New York's Fifth Avenue Apple Store.

(Credit: Caroline McCarthy/CNET)

SAN FRANCISCO--What a difference a year makes.

Apple released its third-generation iPhone Friday, but considerably smaller and quieter crowds came out for the smartphone's debut. It was a stark contrast to the frenzied first day sales of the original iPhone and last year's iPhone 3G. Friday's lines outside stores across the country were reportedly 100- to 200-people deep in some places, falling short of the lines that sometimes stretched for blocks in 2007 and 2008.

Also different this year was the activation process for new phones. Both Apple and AT&T's servers appeared to hold up much better this year, with many buyers Friday morning reporting quick, easy transactions. After just an hour, folks lining up outside Apple and AT&T stores in New York City, San Francisco, and Emeryville, Calif. were filing into the stores in an orderly manner, with no brawls breaking out over line-jumping or the headache-inducing activation problems of last year to be found.

The relatively lower turnout in the early morning wasn't really unexpected. Both Apple and AT&T offered a few more options for purchasing the 3G S this year that appeared to reduce the chaos--offering preordering and the ability to reserve iPhones for in-store pickup. Some customers who may have wanted a new phone are not yet eligible for an upgrade from AT&T unless they want to pay a hefty "early upgrade" fee, and for others, the 3G S isn't that much of an improvement over the 3G model released last year.

NEW YORK--Collins Osei, who had bought an iPhone 3G last year, came to the AT&T store Friday not to buy the latest-generation iPhone 3G S, but instead he wanted to downgrade to a less expensive Nokia phone.

Nokia 2600

(Credit: CBS Interactive)

Osei said his decision to go back to a basic-feature phone was all about cost. The iPhone and its service plan are simply too expensive, he said. Osei, who is in the middle of his two-year contract with AT&T, had his iPhone 3G stolen recently. But he said replacing it with a new one would cost too much. Instead, he picked up a Nokia 2600 for a mere $43.

But Osei's decision didn't hinge just on the upfront cost of the phone. He also said he was tired of paying the additional $30 a month data charge that is mandatory with the iPhone.

"The iPhone plan was just too expensive," he said. "They made me pay $30 extra a month for data, and I don't really need the Internet on my phone. So I went back to a regular phone. And now I'm on a plan that costs $39.99 a month."

Osei might not be the only consumer out there turned off by the high cost of the iPhone service fee. Unlike previous iPhone launch days, there was no line of people this morning waiting outside the AT&T Time Square store hoping to get the latest iPhone 3G S. In fact, it looked like more customers were leaving the store empty-handed or with other devices than those leaving with new iPhones.

Now that the iPhone 3G S is officially behind us, let me be the first--or at least one of the first--to announce the countdown to the next new iPhone. If history is any indication, it should show up right around this time next year.

Interestingly, even though the 3G S is technically Apple's third-generation iPhone, some tech pundits were expecting the iPhone 3G S to be called the iPhone 4G. But you could also argue that the iPhone 3G S is more like the iPhone 3.5G, which doesn't have the greatest ring.

There's also a chance that in between the iPhone 3G S and iPhone 4G (or whatever it's called), we might see a totally new branch of iPhone, something akin to an iPhone Mini or Lite.

I'm not sure Apple needs to answer to the smaller form factor of the Palm Pre, but there are some people out there who think the iPhone's just a tad too big. And there are some people who want a physical keyboard, but don't count on Apple slipping in a slide-out keyboard anytime soon.

Gizmodo and other blogs posted this concept art for the iPhone 4G before Apple announced the 3G S.

(Credit: Rodolphe Desmare)

All that said, I do think next year's iPhone will feature a new design that also includes a new screen. Some mock-ups floating around have suggested the aluminum unibody design of the new MacBooks. That's possible, but so are a host of other innovative industrial designs.

The point is, the next go-round, it's probably not enough to just stick with upgraded internal components. Some significant cosmetic changes will be required to differentiate the generations and more easily entice upgrades by existing iPod owners. And I'm not talking matte vs. shiny finish.

Ultimately, however, it's what's inside that counts and consumers are always wanting faster, more powerful smartphones with more memory that somehow manage to be more energy-efficient and offer better battery life. There's already talk of the next iPhone having a dual-core processor and better graphics chips that can deliver higher video resolutions and better still images when taking pictures (read Brooke Crothers' story on new ARM chips here).

The question is whether Apple can continue to increase battery life at the same time. In fact, one big reason a lot of people are interested in upgrading from the 3G to the 3G S is because of the improved battery life.

Beyond the hardware, there are still features concerns to address (everybody has their wishlist) and more importantly, carrier and pricing plan issues. Someday, some other carrier, perhaps Verizon, which is preparing to build out a 4G network, will get the iPhone. And someone, maybe Apple, will declare that iPhone the iPhone 4G. Or maybe it'll just be the 3G V. All I know is that come this time next year, we'll most likely be seeing a new iPhone. And it will be here before you know it.

Comments? Aside from a carrier choice, what are looking for in a true 4G iPhone?

Adam Hirsch, COO of Mashable, joins the show today to talk about something that we thought would never happen: social networking for doing actual good in the world.

Adam before he descends into madness.

(Credit: Justin Yu/CNET)

Yeah, instead of flash mobs or sending NSFW pictures to your buddy, Adam has started the Summer of Social Good, which harnesses the power of social media to actually do some charity work in the world. You can donate a minimum of $10 to the organization, and it will split the donation evenly between The Humane Society, LIVESTRONG, Oxfam America, and WWF--not the World Wrestling Federation. We also chat a bit about the future of social networks, especially given the election of Barack Obama and the on-going Iranian election controversy. There is even a city in America that now asks for your Facebook log-in when you apply for a job in its government!

Also today, the iPhone 3G S launched this morning. It wasn't nearly as mad crazy as it was last year or for the original iPhone launch. Mostly, we think it's because there aren't that many new great features aside from faster speed, bigger capacity, and a faster processor. Also, we think that AT&T might have been a little too harsh with its upgrade policy. But if you really, really want the new iPhone 3G S and you have an older iPhone, check out YouRenew.com. For this week, it will buy your old cell phone and give you back some hard cash. Owners of the iPhone 3G 8GB can get $200!