iPhone 3G costs Apple $173 in parts, and how Apple saved $53 over the original iPhone
By Will Park on Tuesday, June 24th, 2008 at 2:10 PM PST In Apple, Financial/Corporate News, Research, iPhone, iPhone OS
Following on previous estimates that the iPhone 3G totaled up a BOM (bill of materials) in the neighborhood of $100, iSuppli, the supply analysis experts have come out with their own estimation of how much the iPhone 3G costs Apple (NSDQ: AAPL) to make.
iSuppli puts Apple’s parts out-go at $173 for the iPhone 3G, compared to $226 for the first-generation iPhone. That gives Apple a $53 per unit savings on the cost of parts for the iPhone 3G.
But, just how did Apple manage to cut $53 off the cost of the iPhone?
Apple’s buying power in the Flash memory market netted them memory chips on the cheap, and by reusing components, like the Samsung-sourced processor, from the original iPhone, Apple managed to leverage their economies of scale to save on parts for the next-generation iPhone 3G.
Apple has introduced new GPS hardware from Broadcom (NSDQ: BRCM) and a 3G chipset from Infineon (NYSE: IFX), but most of the other iPhone 3G’s guts are carried over from the iPhone 2.5G. Apple has “done a good job in using what worked well with the first one and making improvements where it mattered,” says iSuppli analyst Jagdish Rebello.
Apparently, the biggest money maker is the 16GB variant of the iPhone 3G. The extra Flash memory costs Apple $23, but adds a full $100 to the retail price – those are some nice margins indeed.
[Via: BusinessWeek]
WOW that is just impressive. I mean its amazing how much revenue this company generates and still doesn’t payout anything to its shareholders. 15 Billion in cash reserves.. Shouldn’t they start acquiring some companies already?
They sold 6 million handsets last year and with this new price drop it would probably double if not triple. Now do the math 10 million handsets @ $53 a pop = buy some Aplle shares … lol
Hmm, that much cash reserves would seem to be a liability, as they are opening themselves up for a “leveraged buyout”. Basically, for someone to come up with enough shares+money to buy Apple’s shares, they would then have those $15 billion available to pay for the purchase.
That’s why a lot of companies that want to prevent takeovers buy back stock, thus reducing cash reserves (even to the point of incurring debt).