Apple set to profit from 3G iPhone due to cheaper parts, memory
Despite its new capabilities, the new 8 GB 3G iPhone will cost Apple $100 less than its predecessor a year ago, indicating the company is set to drastically increase its profit margin on the device thanks to its new arrangement with AT&T.
In a preliminary teardown by hardware analysis firm iSuppli of the 8 GB iPhone 3G — Apple’s less expensive model, at $199 retail through AT&T when it launches July 11 — iSuppli estimated Apple’s bill of materials (BOM) per unit totaled $173.00.
By comparison, iSuppli estimated in January 2007 that Apple was reaping a profit margin of over 53% for its original 8GB iPhone — at that time, its most expensive model — with a total BOM of $280.82. In 17 months’ time, the new 8 GB iPhone 3G costs 62% less for Apple to build, even with GPS thrown in (a component that costs all of $3.60 wholesale).
Contributing greatly to the reduced manufacturing costs is the continuingly plummeting price of NAND flash memory. Last December, iSuppli estimated that 8 GB of NAND flash contributed $40 to the bill of materials for the new iPod Touch.
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