Apple ‘makes $420 on each iPhone sold’

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El Segundo (CA) – Industry watcher iSuppli says that the new iPhone 3GS costs Apple just $178.96 to build.

The 16GB iPhone 3GS only costs the company three percent more to make than last year’s model, with a bill of materials totalling $172.46 plus $6.50 in manufacturing costs, says the company.

Apple’s US carrier, AT&T, sells the 16GB iPhone 3GS at a subsidized $199, but industry watchers reckon that AT&T and other carriers cough up around $600 per phone. In the UK, Apple’s carrier of choice, O2, sells a pay as you go 16GB iPhone 3GS for a whopping $719.85.

“The actual price of the phone paid by the service provider is considerably higher,” says iSuppli’s Andrew Rassweiler. “Reflecting the common wireless industry practise of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions.

Last year, iSuppli calculated that the iPhone 3G only cost about four dollars less to make than the new phone:

“From a component and design perspective, there’s a great deal of similarity between the 3G and the 3GS,” adds Rassweiler. “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.”

iSuppli reckons the most expensive component in the phone is the 16GB of Toshiba flash memory, which it values at $24. The cheapest part is a Cirrus Logic audio codec priced at $1.15.

Apple claims it sold a million iPhone 3GS phones in the three days following its launch, which would equate to a cool $420 million profit¬†if iSuppli’s numbers are accurate.

 

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