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Apple earns approximately a $400 profit per 16 GB iPhone 3G S sold, and $500 per 32 GB 3G S sold.  (Source: iSuppli)
Apple is making a handsome profit on its new phone

Apple has reportedly the world's strongest brand image, and yet manages to maintain some of the industry's largest profit margins, a rare achievement.  Now that the iPhone bill of materials (BOM) for the iPhone 3G S has been divined thanks to an iSuppli tear down, it appears that Apple has another business success story on its hands with the iPhone 3G S.

The hot new phone's components cost $172.46, for the 16 GB model, according to Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli.  The most expensive component is the 16 GB of NAND flash memory, produced by Toshiba and estimated to cost $24/unit.  Least expensive is the audio codec chip, which costs a mere $1.15/unit, produced by Cirrus Logic.

The phone costs approximately $6.50 to assemble, bringing the estimate cost to $178.96/phone. 

The 16 GB iPhone 3G S costs $599.99 for returning customers with less than a year on their contract, and as little as $199.99 for new customer or returning customers with 2 years on their contract.  However, according to reports, Apple sells the iPhones to AT&T at approximately $600 per phone, and the carrier provides the discount.  Apple is also rumored to get a small cut of the subscription fees.

States Mr. Rassweiller, "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."

At a minimum, before shipping, R&D, etc., it appears Apple is making a whopping  $422 profit on every $178 (manufacturing cost) phone sold.  That incredible profit margin may be cut into a bit by the aforementioned expenses of transportation, R&D, advertising, and other costs, but likely remains quite impressive at the end of the day.  Even better for Apple, it likely enjoys an even larger profit on the $699 32 GB iPhone 3G S, as the only difference is a marginally more expensive (likely $20 or less) NAND chip.

Concludes Mr. Rassweiller, "From a component and design perspective, there's also a great deal of similarity between the 3G and the 3GS. 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."

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Good for Apple!
By therealnickdanger on 6/25/09, Rating: 0
RE: Good for Apple!
By ice456789 on 6/25/09, Rating: -1
RE: Good for Apple!
By orgy08 on 6/25/2009 9:02:55 AM , Rating: 5
Or the stupidity of the masses.

RE: Good for Apple!
By invidious on 6/25/09, Rating: 0
RE: Good for Apple!
By joeindian1551 on 6/25/2009 12:11:27 PM , Rating: 5
What they expect is something that says Apple and instantly makes them "cool"

RE: Good for Apple!
By inighthawki on 6/25/2009 1:02:41 PM , Rating: 2
But if the customers knew how much Apple was overcharging then surely they would feel different. Nobody likes paying triple the cost of an item...

RE: Good for Apple!
By TomZ on 6/25/09, Rating: -1
RE: Good for Apple!
By Jimbo1234 on 6/25/09, Rating: -1
RE: Good for Apple!
By Hiawa23 on 6/25/09, Rating: -1
RE: Good for Apple!
By TSS on 6/25/2009 1:13:48 PM , Rating: 1
if you've come to expect apple of having ridicolous profit margins and then still buy their stuff, how is that not stupid?

RE: Good for Apple!
By adiposity on 6/25/09, Rating: 0
RE: Good for Apple!
By adiposity on 6/25/2009 4:45:29 PM , Rating: 2
Fine, mod me down for saying there is no competition in the iPhone market...


RE: Good for Apple!
By callmeroy on 6/25/2009 9:15:23 AM , Rating: 2
or the lack of any real competition to the Iphone.....closing thing to it is Palm Pre.....and yeah..that's about it.

RE: Good for Apple!
By EasyC on 6/25/2009 9:20:33 AM , Rating: 5
My Touch Pro w/ spb spanks my buddies iPhone.

I vote stupidity of the masses. Masses love trendy products. (i.e. tickle me elmos).

RE: Good for Apple!
By Integral9 on 6/25/2009 9:27:07 AM , Rating: 2
I agree with ya. Apple could drop the price of the phone $200, still make $200 on the phone, and the masses could get it for free! The masses are stupid.

RE: Good for Apple!
By ice456789 on 6/25/2009 9:52:09 AM , Rating: 5
But that's the point isn't it. They are moving plenty of units at current pricing, so why lower it if consumers are willing to pay it? The goal in business is to make as much profit as possible, not to sell goods at the lowest price possible.

RE: Good for Apple!
By TomZ on 6/25/2009 9:58:18 AM , Rating: 5
No, in the United Socialist America (USA), the goal is to sell everything as cheaply as possible so that more people can buy it. The evil greedy corporations must be stopped!

Oh, and it had better be green, too!


RE: Good for Apple!
By omnicronx on 6/25/2009 11:15:39 AM , Rating: 1
But that's the point isn't it.
And how could you possibly know this is the best way to turn a profit? Sometimes I just don't understand Apple, it makes sense for them to sell their laptops for a higher price if people are willing to pay, but with the iPhone, the app store has the potential to make well over $200 over the time they own the phone.

So just think about it, if the price actually was $200-300 new instead of 500-600, they would easily outsell the competition, and make it all back and more on the app store, all the while making it affordable to the masses. They could easily sell twice as many phones if the price were cheaper than most other phones out there. Not to mention it would push users to upgrade their phones upon a new release.

RE: Good for Apple!
By TomZ on 6/25/2009 11:21:07 AM , Rating: 1
I would assume that Apple has very closely studied the demand-vs-price curve for their products and has figured out the optimum pricing point. Why would you assume otherwise?

RE: Good for Apple!
By mmcdonalataocdotgov on 6/25/2009 11:40:51 AM , Rating: 2
The problem with the article is the "other" aforementioned costs that have been left out, which are considerable. R&D is a large cost, what about the cost of running their leases on office space, heat and light, water and sewer, taxes, HR plus salaries and benefits, IT, legal and other departments like accounting, vehicles and gas, brick and mortar store fronts and related personnel, shipping, and the real biggy: marketing and advertising. I think it is more likely that Apple makes at most $50 per unit that could go to net profit.

BTW, I am a total PC fan, although I have a nano.

RE: Good for Apple!
By callmeroy on 6/25/2009 11:57:27 AM , Rating: 2
But you are missing a key point though --- you don't include much of those items into your costs of a single product line.....unless the facility was built SOLELY for making ONLY a single specific product to assume the costs of the building, sewer and water, account, taxes, HR, etc. The costs of utilities, building expense, taxes are spread throughout the business not on a single product line (unless you literally only have a single product of course), this is certainly not the case with Apple though.

RE: Good for Apple!
By omnicronx on 6/25/2009 11:53:55 AM , Rating: 2
Because it is the safer route of course. That is Apples MO with PC's and laptops, so I don't see them changing for the iPhone,iPod. But as I have already stated, their computers don't have an Appstore to bring in millions. Apple does not seem to care too much about market share, which makes sense right now, but eventually competitors will move in and take the lower echelon of the market with a comparable App store and phones. Right now they have the chance to expand making the job of other manufacturers that much harder, they may not have that opportunity at a later date.

The HTC hero looks amazing if you ask me, their interface blows the iPhone interface out of the water. Can't wait for other Manufacturers to customize the Android interface in the same way. (Samsung among others are working on their phones as we speak)

RE: Good for Apple!
By rudy on 6/25/2009 2:47:10 PM , Rating: 2
Actually not always true the Tag case study in business speaks the opposite. Sometimes as in apples case you sell more by pricing something higher. I also am involved in the art world and see the same thing. The reality is people are as stupid as you think and if apple priced it lower they woudl think it is not as good but by making their products high priced then advertising that they are better then anything else people believe it is true and so they happily pay more because they believe they are getting something worth more. Apple has done a great job they realized their was no way they could compete with the value of other companies so they stopped doing that and just positioned themself as a high end brand look we all know that a BMW or Gucci is not worth what is charged but people will still buy them at a premium because it speaks more to the fact that they have the money to do it. That is what really makes them feel good. A 15$ timex keeps better time then any swiss rolex yet people still buy the rolex.

RE: Good for Apple!
By web2dot0 on 6/25/2009 3:34:55 PM , Rating: 2
Yeah, and you shouldn't buy any gas either since it costs like 5cents/litre in the 70s.

What's you point about over charging? You yourself will charge as much as the market will bear. It's simple economics. Apparently, you yourself did not take Econ 101.

No one cares how much it costs to manufacturer unless you are Apple or its competitors.
It is because we do not get access to those pricings.

Do you know how much it costs to harvest coffee beans in South America douchebag?
Maybe you shouldn't buy coffee or t-shirts .... or better yet, any thing manufacturered in China or from 3rd world countries? It's absurbed...

RE: Good for Apple!
By corduroygt on 6/25/2009 10:24:10 AM , Rating: 1
Obviously you've never used an iphone.
It may "spank" the iphone in screen resolution, and other hardware aspects, but iphone OS is superior to every other phone out there. And with jailbreak, you can get the features AT&T doesn't want you to have such as Voip over 3G.

RE: Good for Apple!
By omnicronx on 6/25/2009 11:07:37 AM , Rating: 2
Depends, if you don't download apps, or could care less about them, I have seen some pretty nice customized home screens with Spd on WinMo.. The iPhone has a nice and smooth stock interface, but if you know what you are doing, you can make your phone look ten times better on WinMo. Now of course if you are the kind of person that wants tons of apps, it is obviously not for you. (My problem is you should not have to do these customizations, as a stock WinMo setup just plain sucks)

p.s I really doubt you have used a TP done up to the tits, so what exactly are you basing your statement on? On the otherhand it is more than likely that the op has used an iPhone/iPod touch.

RE: Good for Apple!
By corduroygt on 6/25/2009 1:37:50 PM , Rating: 2
I base it on my WinMo 6.1 experience. I wouldn't say OS X is better than Windows 7 (I prefer OS X but that's because I'm UNIX biased), but it's obvious that Windows 7 has a lot more effort put into it. However, there is no competition with the iPhone OS. Within 1 year, they have more apps than other OS's that've been around for 10 years. And the touch screen is the best in the business.

RE: Good for Apple!
By xti on 6/25/2009 11:05:54 AM , Rating: 2
trendiness is part of the product just like a camera feature, for example.

RE: Good for Apple!
By Zaphod Beeblebrox on 6/26/2009 2:41:07 PM , Rating: 2
Good point, bad example.

RE: Good for Apple!
By Hiawa23 on 6/25/2009 2:03:53 PM , Rating: 2
Or the stupidity of the masses.

oh no you didn't, LOL. Well, I am not one of them

RE: Good for Apple!
By Hare on 6/25/2009 11:47:17 AM , Rating: 5
You know what? I bet it didn't cost a dime to do all the research and development for the actual software and the hardware.

It's ridiculous to talk about "profit" purely based on HW costs. Every single company has list prices higher then the actual bill of materials. Otherwise they would have no money for development and would be quickly out of business.

I'm not defending Apple or any other company, I just think these comments are simply stupid and short sighted.

RE: Good for Apple!
By 67STANG on 6/25/2009 1:10:49 PM , Rating: 2
You forget that Apple has never once advertised the iPhone on television, doesn't package it and doesn't do any sort of printing of materials for it...

So there obviously aren't any marketing costs involved with each phone...

RE: Good for Apple!
By phaxmohdem on 6/25/2009 1:47:57 PM , Rating: 1
I'm pretty sure I saw an iPhone television commercial once (or ten times)... I think the tagline was "Wanna post a comment without knowing WTF you're talking about? There's an app for that."

RE: Good for Apple!
By phaxmohdem on 6/25/2009 1:51:18 PM , Rating: 3
*re-reads previous posts... and starts writing an iPhone app for my own stupidity called iRecognizeSarcasm

RE: Good for Apple!
By superPC on 6/25/2009 3:38:03 PM , Rating: 2
well the component list does not account for iphone fancy casing. who knows maybe it cost apple 350$ to make one of that casing. (sarcasm). you can buy a legally unlocked iphone without contract in Australia for 700$. apple makes an even bigger profit there (not accounting for some small fee they take from subscription fee)

By dagamer34 on 6/25/2009 9:00:47 AM , Rating: 5
At a minimum it appears Apple is making a whopping $422 profit on every $178 (manufacturing cost) phone sold.

I think you meant, at a MAXIMUM. Apple cannot make anything MORE than $422 per phone. And the fact that the title strongly misleads the reader is quite horrible. Not until you get to that paragraph do you start mentioning things like R&D, shipping, and paying for retail costs. It's not trivial! Manufacturing costs != cost to company.

Badly written article.

RE: Minimum?
By orgy08 on 6/25/2009 9:04:45 AM , Rating: 2
When you consider the other cost, maybe thats an additional $100 cost per phone, thats still over $300 in profit. But you go ahead and give your money away.

RE: Minimum?
By retrospooty on 6/25/2009 9:24:47 AM , Rating: 5
"When you consider the other cost, maybe thats an additional $100 cost per phone"

Higher... The BOM is just what it says it is - bill of materials. The materials cost that price. Its not just shipping and R&D - there are software licenses, and tremendous internal OS costs. I supposed you could roll that up under R&D, but its not cheap. There is packaging, manufacturing, quality control, ongoing reliability testing, shipping, reverse logistics (repair and the associated costs) and likely a half dozen other things I am failing to remember at 6 AM. It costs alot. I am sure they are making a nice profit, but to think the overhead costs only $100 is a fantasy.

RE: Minimum?
By tenat on 6/25/2009 9:33:25 AM , Rating: 2
well said retrospooty.

the price of a product is not the sum of the components used. Price is set by what the market is willing to pay for the device/service.
the cost to come up with an innovation is usually much higher.

the amount of money Apple would spend to develop a new phone would be huge compared to what it would cost them to produce the phones in large amounts.

RE: Minimum?
By orgy08 on 6/25/2009 9:45:25 AM , Rating: 2
Not much has changed from the orignal iphone in terms of software and r&d. I would say most of the r&d and software were recovered for the first iphone and maybe some of the first iphone 3g. I just through out $100 per phone as a number, but your right, it could be higher, but then again it could be lower.

RE: Minimum?
By retrospooty on 6/25/2009 9:53:29 AM , Rating: 2
"Not much has changed from the orignal iphone in terms of software and r&d. I would say most of the r&d and software were recovered for the first iphone and maybe some of the first iphone 3g"

That's nice of you to say that, but the fact is you dont know how much it is, or was, or continues to cost in updates, bugfixes and new features, writing the ROM upgrades, QC etc etc. The way companies work is they pay internal costs. The hardware/iphone division pays X amount of dollars to the OS division per phone. The OS may or may not have paid for itself by now - it WAS a huge leap forward that changed smartphones forever.

Everyone acting like these costs dont exixt, or minimalizing thier impact, incvluding the article's author have obviously never working in a manufacturing environment - at least not a high level job.

RE: Minimum?
By omnicronx on 6/25/2009 11:32:12 AM , Rating: 2
While all of that may be true, Apple does have a track record of having impressively high profit margins, it would not be beyond the realm of possibility to believe that Apple is making a pretty penny on these iPods. You don't need to work in a manufacturing environment to make this inference ;)

RE: Minimum?
By omnicronx on 6/25/2009 11:28:22 AM , Rating: 2
But how much of that is still ongoing? There is no way they are spending anywhere close to the amount in R&D as the original iPhone. This is just common sense, as a product matures, costs go down. That being said, there is no way there is only an overhead of $100. Although my guess is that they are making around 200$ per Touch which is still quite impressive.

RE: Minimum?
By Shadowself on 6/25/2009 11:53:31 AM , Rating: 2
While the hardware leap from the 3G to the 3GS was significantly smaller than the leap from no phone to the original iPhone, the ongoing R&D on these phones is still huge. They purchased PASemi last year specifically to be able to create better chips for this phone -- and the PASemi guys have not been sitting doing nothing since then. You can bet there have been, or at least soon will be, several runs (or "spins") of test CPUs and other chips specifically designed for the next generation phone.

There is a lot more to ongoing R&D on these types of products than most people think

RE: Minimum?
By ZeeStorm on 6/25/2009 9:28:58 AM , Rating: 2
I paid $300 for my 32GB phone, which costs them more than $300 to make and get it to me. AT&T covered the rest of the costs... did I lose out at all? No, I don't think so.

Plus, you're STILL wrong. The amount of costs that Apple dipped into during the 1st gen and 2nd gen definitely are made up through the profit on the 3rd gen. For example, look at all these car companies. Does it really cost $27k~ to build a new Prius? No, it's more like $10-15k for the manufacturing costs, but over the course of how much time and money spent to actually BRING it to consumers, averages out the price to high $20s. People like you just are narrow-minded Apple-competition fanbois... considering almost every corporation that has manufactured goods to date does what Apple does.

RE: Minimum?
By ZeeStorm on 6/25/2009 1:06:32 PM , Rating: 2
Also did you think about the cost of the OS? Least it's their own brand, but you're paying for that too, and that's not in manufactured costs.

Least it's not the cost of Windows 7:

These stupid articles (and the people who write them) are retarded when they don't think of all the extra costs that go into something like this. iSuppli can't cover everything. All 100+ blogs that have reported this are wrong with their claims of over $400 profit on the iPhone...

RE: Minimum?
By raymond520 on 6/25/09, Rating: -1
RE: Minimum?
By psychobriggsy on 6/25/2009 10:06:37 AM , Rating: 3
How much is R&D per phone when they're probably expecting to sell 20 million of them before the next model comes out? $10 per device? Certainly no more than $50 per device - I can't see them spending $1b on iPhone OS 3 and the hardware design and testing.

Possibly they're letting the carrier make some money on each phone though. Sell it to the carrier for $500, let the carrier charge $600 for it, $100 incentive to the carrier to push that phone, and also acquiesce to Apple's demands (here, implement visual voice mail, now implement push notification, etc).

Still, that's still well over $250 profit per device, probably $300 on average. That's a good $6b profit over the next year (in reality, before the GAAP thing Apple does).

RE: Minimum?
By fishbits on 6/25/2009 10:20:19 AM , Rating: 2
Horribly misleading. Wow. How can a person write something that invalidates his own headline, then not fix that headline before posting it? Don't know whether it's scarier that this behavior is deliberately dishonest, or that the author would claim to not know any better.

RE: Minimum?
By Regs on 6/26/2009 1:26:52 PM , Rating: 2
Seriously. Remember taking Accounting in college? Cost of goods sold = direct labor, direct materials, overhead! Then you take the costs of goods sold and add it to the income statement. Even then you have to subtract all indirect expenses to come up with revenue.

This article should be deleted.

Is Apple different than MS
By holywarrior007 on 6/25/2009 10:33:45 AM , Rating: 2
People blame MS for sucking people's hard earned money. Here comes another company. Makes good products indeed, but then equally thirsty about the money. No thought of providing people more affordable products.

RE: Is Apple different than MS
By TomZ on 6/25/2009 11:16:47 AM , Rating: 3
What is the purpose of a "for profit" corporation, in your view? To earn the most profit, maybe? They are not a charity.

In addition, consumers are free to choose to buy or not buy their products. Each individual makes a value decision about whether the product is worth the cost or not.

I don't see what you're complaining about. Everything seems as it should be to me.

RE: Is Apple different than MS
By holywarrior007 on 6/25/2009 11:33:40 AM , Rating: 1
To earn the profit might be the goal of every company. However, corporations should also practice people oriented pricing sometimes. If the reports are true than the profit on the iPhone is much more than the original price itself. I would not consider it to be a good business practice.

Of course, people would pay if they think that is the best option they have got, and they can afford it. I am not complaining. Just putting forward my point.

RE: Is Apple different than MS
By TomZ on 6/25/2009 11:40:09 AM , Rating: 2
However, corporations should also practice people oriented pricing sometimes.
I disagree. Companies should study the demand for their product at various price points and pick the price point that maximizes overall profit. That's "Business 101" and any company with outside shareholders not doing that should have their management fired.

If, on the other hand, someone owns their own company and decides to use "people oriented pricing," then I think that's just fine.

RE: Is Apple different than MS
By holywarrior007 on 6/25/2009 12:19:48 PM , Rating: 1
So u support the greed of many over the greed of one? But why someone would decide about the people oriented pricing when people (shareholders) don't want themselves? Your arguments are fine as they reflect that you do have an acute sense of doing business and earning profits. However, there is one more way of earning more profits which is to make products more affordable yet retaining the quality, and I think that's not a bad business model too.

RE: Is Apple different than MS
By TomZ on 6/25/2009 12:49:49 PM , Rating: 3
I already stated that I think that companies should price their products to maximize profits. That is not in contradiction to your statement that a company could earn more profits by lowering the price.

I also don't understand your notion of "greed." A company that is producing a product that people like and are willing to pay for - that is not greed in the negative sense that you are implying. If that is what you consider greed, then I'd say that "greed is good."

After all, people striving to produce something better, with the ultimate goal of self-enrichment - is what drives our society to collectively great achievements in the business world. A large portion of our civilization is built based on the type of motivation which you label "greed."

RE: Is Apple different than MS
By omnicronx on 6/25/2009 12:30:49 PM , Rating: 2
I disagree. Companies should study the demand for their product at various price points and pick the price point that maximizes overall profit. That's "Business 101" and any company with outside shareholders not doing that should have their management fired.
Now if only it were so clear cut. Business 101 would also teach you that if these maximized profits are not sustainable, then you could easily end up in a far worse position down the line.. Just ask GM..

RE: Is Apple different than MS
By TomZ on 6/25/2009 12:54:29 PM , Rating: 2
I don't see any risk in profits that are "not sustainable," so long as you manage your overhead costs so that you can cut prices in the future when/if competition requires it. I think Apple is perfectly positioned in that sense.

GM is an entirely different situation, since they had high labor costs forced upon them by the unions back when they had a monopoly. I don't see Apple doing the same. Apple's labor is a small part of their costs for their hardware, as it's all built overseas with cheap labor.

RE: Is Apple different than MS
By omnicronx on 6/25/2009 1:16:46 PM , Rating: 2
I don't see any risk in profits that are "not sustainable," so long as you manage your overhead costs so that you can cut prices in the future when/if competition requires it.
That was pretty much the point I was trying to get across, I was not trying to take anything away from Apple and their business strategy, nor was I trying to directly compare them to the crappy management of GM.

One thing I would like to mention though, the cell phone industry is not the PC industry, if Apple treats it as such they could be in for a big surprise. I think they will soon be forced to diversify into more than a single line or people will get bored.

Bad Article
By listerer on 6/25/2009 9:20:19 AM , Rating: 2
This cost is only the cost of materials. What about assembly cost? Software cost? Then there's all the the indirect costs like setting up machinery heating the factories addedd to the significant amortized development costs. These could easily double the material cost. I'm sure apple is making a tidy profit -- that's their job. This inflamatory article is badly written and researched.
When you get $50 from ads on the site is that all profit? Do you discount all the work that went into writing the articles -- I doubt it. Stop writing go make something!

RE: Bad Article
By Spivonious on 6/25/2009 9:41:24 AM , Rating: 2
Yeah but I doubt they spent $500 per unit on assembly, marketing, and development.

Back in March they hit 17 million sold. $500 per unit = $8.5 billion.

RE: Bad Article
By tilandal on 6/25/2009 1:53:26 PM , Rating: 2
It looks like they only costed the PCB. There is a ton of stuff conspicuously missing from that bom including the charger, the battery, the case, the packaging and the manuals. All these items likely cost a lot more then $1.15 which is the cheapest item on the bom. On top of everything listed so far you need to add the cost of testing, assembly, fallout, warranty and support. Over this you add the one time cost of HW and SW R&D, SG&A (ie the cost of advertising, rent, electricity, water, etc). After all this is done you can finally talk about profit.

Personally I would estimate there is another ~$100 involved in per unit costs. Now we are in the $275 ball-park. SG&A is usually taken as a % of any product made. Having a low SG&A is good for a business. Apple spends roughly 3.8 Billion on SG&A yearly on 32 Billion of revenue. This yields about 12% SG&A (rough estimate). This brings the total cost to about $310 before development and profits. Selling these for $500 - $600 is not unreasonable.

And before anyone asks, I know what I'm talking about because this is part of what I do for a living.

RE: Bad Article
By TomZ on 6/25/2009 2:22:28 PM , Rating: 2
It looks like they only costed the PCB. There is a ton of stuff conspicuously missing from that bom including the charger, the battery, the case, the packaging and the manuals
You must have overlooked the $48.00 estimated for other items in the BOM.

You do this for a living - overlook things like that? j/k

RE: Bad Article
By tilandal on 6/25/2009 5:40:24 PM , Rating: 2
The other $48 covers thing like caps, resistors, inductors, filters, voltage regulators, voltage references, buffers, logic gates and anything else that costs less then $1.15 (its arranged in order of price) or did you really think there were only 15 item on the entire board? A board of that level of complexity may have 200-300 unique parts on it.

RE: Bad Article
By klamp54 on 6/25/09, Rating: 0
My question is
By ice456789 on 6/25/2009 9:59:38 AM , Rating: 3
How can any outside firm claim to know the price Apple is paying for each and every component down to the penny? When a company buys a product in bulk, they negotiate a deal that is different than any other company. Often they leverage suppliers against each other to lower the price more. Unless iSuppli gets 1st hand information from either Apple or the supplier, there is no way to know exactly what Apple is paying for any part. And neither Apple nor the supplier would leak that info willingly.

Depending on how iSuppli estimated the costs, the teardown price could actually be even much lower than these estimates.

RE: My question is
By TomZ on 6/25/2009 10:32:52 AM , Rating: 1
The iSuppli costs are only estimates. You are right, they don't use inside information, but in theory any customer ordering a certain volume of parts will get about the same pricing. Also, pricing will change as a function of time, so even that affects the accuracy of the estimate.

RE: My question is
By smackababy on 6/25/2009 10:34:04 AM , Rating: 2
I am sure Apple can go to Samsung and say "Hey we need NAND for our new iPhone". Samsung knows the phone is going to sell 10million units at least. They give Apple a discount.

RE: My question is
By omnicronx on 6/25/2009 11:24:18 AM , Rating: 3
Look at the list, there is a reason they state if there are multiple supplier. This probably lowers the estimated price for these components for the exact reason you stated. Its not very hard to open up a phone and build a list of materials.

While not perfect, it should be a very close estimate and if anything it is probably overestimating the price. Sure it may be off by a few pennies here and there, but the fact remains Apple is making somewhere close to $400 per iPod. Whether the price be off by $50 dollars in either direction, it is still very impressive.

no surprises
By PascalT on 6/25/2009 11:19:17 AM , Rating: 2
Apple feeds on their brand image and sleek plastic shells. The iPhone might be a great phone, but people are willing to dish out more money for Apple products since they look so "sexy" and "hip".

These are the biggest reasons why people will pay 3x the price of a normal laptop for a Macbook.

RE: no surprises
By Phlargo on 6/25/2009 12:24:58 PM , Rating: 2
Go into any shopping mall. We Americans pay tons of money for "sexy" and "hip" and bravo to Apple for embodying those traits in a piece of technology, normally not classified as sexy or hop.

RE: no surprises
By omnicronx on 6/25/2009 12:42:58 PM , Rating: 2
Not exactly the same, i see Mac computers as no different than a T-shirt with a Nike symbol on it. Exactly the same shirt you can buy at winners without the symbol, but it sells for 3x more because of the brand name.

The iPhone on the other hand is currently just plain better than the competition, it is more than just a branded phone. Not that I care but their App store is till heads and heals ahead of any other offering and their ui is still the smoothest and easiest to use by far. When your phone is 3x better than the competition, you can charge 3x more.

By anonymo on 6/25/2009 9:14:02 AM , Rating: 2
Anyone have any idea what the profit margins are like with the BB Storm/Palm Pre as a comparison?

RE: Comparisons?
By callmeroy on 6/25/2009 9:17:34 AM , Rating: 2
I'm guessing no where NEAR even radar range of the Iphone --- because they don't have the sales numbers right now....Apple is hogging the attention, thus the consumer dollars.

By christhomas1981 on 6/25/2009 9:36:40 AM , Rating: 3
Ok no offense but this article doesn't mention that YES they are getting 500 in profit considering part for the phone cost that price. BUT let's think about all the people that have to get paid that worked on the team to develop that product. Apple does not hire dumb engineers and programmers and I'm sure their work doesn't come cheap. So before anyone says "I don't like Apple because of their price". Imagine how you'd feel if you helped make this exceptional product and got paid pennies for it because your CEO and company officials were too stupid to figure out the name of the game is profit and to pay their people they have to have a substantial profit margin. THINK

Does AT&T Really Pay $600?
By randygrenier on 6/25/2009 11:30:55 AM , Rating: 2
I'm a little suspicious of the comment that "Apple sells the iPhones to AT&T at approximately $600 per phone." AT&T is also a business who wants to maximize their profits.

I'm guilty of having a conspiracy theory: Apple manipulates the media with a lot of propaganda including articles like these.

Another misleading headline!
By Jonh68 on 6/25/2009 12:46:56 PM , Rating: 2
I know the goal is to get readers, but Daily Teach is becoming a joke. People are reading it just to see how bad the "journalism" is on this site. This is the cost of Bill of Material, not profit. Another tech site appropriately called it that. There is much more that goes into besides the assembly costs.

Daily Tech is doing a good job of getting readers, although it is at the expense of integrity.

all about brand
By raabscuttle on 6/25/2009 4:11:22 PM , Rating: 2
Apple charges more for the phone "because they can". They have legions of "Applite" followers who are willing to pay for the product, so why shouldn't they charge as much as they possibly can for the product.

The product itself doesn't matter much as cell phones are pretty much commidity products that use similar parts and are made in similar factories (what, didn't you know that Apple doesn't actually "make" the phone, they contract it out) and if they stuck an Apple logo on the Storm, people would be buying it at $599 a pop, or the Pre or the G1. The product doesn't matter, the brand does.

Apple iPhone pricing...
By croc on 6/25/2009 6:24:20 PM , Rating: 2
... in Aus is ~AUD 900 for the 16GB unit, over 1k for the 32GB unit, unlocked.

Money makes Money
By Uncle on 6/25/2009 12:53:02 PM , Rating: 1
Well if Apple makes that kind of profit, quit bitchen, and buy Apple shares. People pay extra for Designer clothes, designer anything. Apple makes a Designer Iphone. Apple labels happen to be a Designer label and you pay more period.

"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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