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New iPhone 3GS Costs $178.96 To Make
Just $4 more expensive than iPhone 3G...
iSuppli's bill of materials (BOM) cost estimates are always an event, riling up armchair CEOs and brand fanboys into a lather after every new smartphone release. iSuppli's latest analysis of the iPhone 3GS finds the 16GB version costs $178.96 to make -- just $4 more than the iPhone 3G. For those playing along at home, that's $20 less than the subsidized AT&T price, $201 less than it costs existing iPhone users under contract to upgrade, and $420 less than AT&T charges for the phone without a contract. While the use of many iPhone 3G parts keeps the 3GS's price down, there's a few changes. Most notably, the 3GS features a $5.95 Bluetooth/FM/WLAN Broadcom chipset, AKM Semiconductor's electronic compass and STMicroelectronics' accelerometer for compass functionality, and Qualcom's $13 PMB8878 baseband chip for 3G.
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imanogre
join:2005-11-29
Smyrna, GA

1 recommendation

imanogre

Member

Why

And this is news because? If someone is willing to be stupid and overpay for something, let them.

tiger72
SexaT duorP
Premium Member
join:2001-03-28
Saint Louis, MO

tiger72

Premium Member

Re: Why

welcome to the iphone blog.

ToxicDrew
Premium Member
join:2001-09-24

ToxicDrew to imanogre

Premium Member

to imanogre
said by imanogre:

And this is news because? If someone is willing to be stupid and overpay for something, let them.
I hate too inform you that anything you buy is sold too you for more than it actually cost too make Does that make you stupid too? Anyone buy clothes? A vehicle? Does it cost the slaves in 3rd world countries $50+ dollars in material for a shirt or pair of jeans? Does Nike spend $150 dollars too manufacture Air Jordans?

imanogre
join:2005-11-29
Smyrna, GA

imanogre

Member

Re: Why

Hell, the coke I'm drinking right now cost me 1.50 out of the vending machine, yet cost .08 USD to make. Where's link on the front page to that?
TheMG
Premium Member
join:2007-09-04
Canada

TheMG

Premium Member

Re: Why

Bottle or can?

Over here from vending machine a can is $1.25 and bottle is $2.00

Ryokucha
join:2000-10-20
Ormond Beach, FL

Ryokucha to ToxicDrew

Member

to ToxicDrew
I'm going to have to say yes. Buying those overpriced items is stupid. It is one thing to have a designer suit that is tailor fitted. It is a whole different ballgame when you start buying designer t-shirts for 50-100 bucks off a rack because of a label, that was made in the same factory as that 5 dollar wal-mart t-shirt.

But welcome to America I guess, where consumerism preys on the idea of you have to keep up or be better then everyone else around you. Because in the end that 50 dollar shirt makes you better then everyone else right?

As for the Iphone, consumerism wins again. Am I saying that companies shouldn't make any money, not at all, and would be stupid to say that they should sell anything even close to cost. But I think that the point that they come out with a new phone every year that just happens to have just a few new changes, causes the whole newest best thing. More power to the people who have the money to buy the newest and latest gadgets. But sadly I think there is a number of those same people who also fall into credit debt and default on their mortgage and wonder where they went wrong.

Uncle Paul
join:2003-02-04
USA

Uncle Paul

Member

Re: Why

said by Ryokucha:

But welcome to America I guess, where consumerism preys on the idea of you have to keep up or be better then everyone else around you. Because in the end that 50 dollar shirt makes you better then everyone else right?
If people place a value on the $50 shirt and judge you based on the $50 shirt, then yes... it does make you better than the person wearing the $5 shirt made in the same factory.

tangojoker
Peace
join:2004-01-25
Beaverton, OR

tangojoker to imanogre

Member

to imanogre
exactly. why is this news ? isnt this plain & simple economics.

Bink63
Namedrop THIS
Premium Member
join:2002-10-06
Everywhere

Bink63

Premium Member

Huh???

quote:
New iPhone 3GS Costs $178.96 To Make
Just $4 more expensive than iPhone 3GS...
01:25PM Wednesday Jun 24 2009 by Karl Bode
HUH????


RARPSL
join:1999-12-08
Suffern, NY

RARPSL

Member

Re: Huh???

said by Bink63:

quote:
New iPhone 3GS Costs $178.96 To Make
Just $4 more expensive than iPhone 3GS...
01:25PM Wednesday Jun 24 2009 by Karl Bode
HUH????


I assume that the article is intended to point out how much of a mark-up there is on the phone (especially the unsubsidized purchase price).

Bink63
Namedrop THIS
Premium Member
join:2002-10-06
Everywhere

Bink63

Premium Member

Re: Huh???

But...

how can the iPhone 3GS be "Just $4 more expensive than iPhone 3GS" to make???

IOW...

Karl typo'd!

cghh
join:2001-01-15
Milpitas, CA

1 recommendation

cghh

Member

And the point is....?

I'm not sure what the point is. There is a heck of a lot more to a device such as the iPhone than the bill of materials out of which it is made. There is the hardware design and engineering on how to put the parts together. There is the software, including free software upgrades, which is really what make the iPhone what it is. Software development is not cheap. Yes, there is no incremental cost for the software for each unit, but still, this large cost has to be recovered. And, since Apple is a profit-making company, there is the markup for this.

Whenever discussions like this come up, there is always the conflict between people who believe that the cost of an item should be related to the cost of producing it, and those who believe that the price should be whatever the market bears.

canesfan2001
join:2003-02-04
Hialeah, FL

canesfan2001

Member

Re: And the point is....?

I think the real issue is that usually, a little bit of knowledge is more dangerous than no knowledge at all. People just don't think about cost of products beyond ingredients.
There's also:
-Assembly
-Packaging
-Shipping
-Hardware Development
-Software Development
-Advertising
-Support
-etc...

jmn1207
Premium Member
join:2000-07-19
Sterling, VA

jmn1207

Premium Member

Hon Hai, Hon Hai, it's Off to Work....

Is that in US dollars or Taiwan dollars?

Is that for one unit or a bulk order? There are far too many guestimations being applied to put any legitimate faith in these numbers.

If game players can make a profit selling units below cost and making it up on the hopes of consumers purchasing 1-2 games each month over a couple of years, certainly the cost of a phone can be surpassed with a 2 year contract charging $60 or more dollars every billing cycle. This seems to be a viable and lucrative business model.
twinkledee12
Premium Member
join:2009-06-24
Fort Wayne, IN

twinkledee12

Premium Member

ummmm

this disturbs me. at&t should be selling the phone for the cost of the phone plus whatever the cost of distribution is. this makes me wonder what other providers are charging more than what the phone actually costs to make. the fcc and congress defiantly should look into this.
caco
Premium Member
join:2005-03-10
Whittier, AK

caco

Premium Member

Re: ummmm

You got to be kidding?

Uncle Paul
join:2003-02-04
USA

Uncle Paul

Member

Re: ummmm

said by caco:

You got to be kidding?
Remember who's reign we're under right now....

FiL25
Premium Member
join:2005-08-16
Silver Spring, MD

FiL25

Premium Member

Re: ummmm

I love not being controlled by Cheney!

Uncle Paul
join:2003-02-04
USA

Uncle Paul

Member

Re: ummmm

said by FiL25:

I love not being controlled by Cheney!
Yet a living example of how the devil you know is better than the devil you don't.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5 to twinkledee12

Premium Member

to twinkledee12
said by twinkledee12:

this disturbs me. at&t should be selling the phone for the cost of the phone plus whatever the cost of distribution is. this makes me wonder what other providers are charging more than what the phone actually costs to make. the fcc and congress defiantly should look into this.
How about the cost of marketing and advertising to all the Apple fanatics that keeps them all lathered up over the latest and greatest from Apple. That probably is at least $100/phone.

Deep Throat
@teksavvy.com

Deep Throat

Anon

Re: ummmm

said by FFH5:

How about the cost of marketing and advertising to all the Apple fanatics that keeps them all lathered up over the latest and greatest from Apple. That probably is at least $100/phone.

I'd pay that just to see John Hodgman in Apple commercials all day long.

dib22
join:2002-01-27
Kansas City, MO

dib22

Member

Re: ummmm

Hodgman rules.

The Dv8or
Just call me Dong Suck Oh, M.D.
Premium Member
join:2001-08-09
Denver, CO
ARRIS TG862
Cisco 2811
TP-Link Archer AX10

3 recommendations

The Dv8or to twinkledee12

Premium Member

to twinkledee12
said by twinkledee12:

this disturbs me. at&t should be selling the phone for the cost of the phone plus whatever the cost of distribution is. this makes me wonder what other providers are charging more than what the phone actually costs to make. the fcc and congress defiantly should look into this.
Yeah! Research and development is free! Software should be free! If I can't actually see the part and buy the part, then I shouldn't pay for any of the process! Sell em wholesale! How dare Apple try and recoup their employees' salaries through sales! I shouldn't have to pay for someone else to have a job! This is America, damnit! The government should sue Apple, and make them only sell the phone for what they pay for in parts!

Cheese
Premium Member
join:2003-10-26
Naples, FL

Cheese

Premium Member

Re: ummmm

YEA, WHAT HE SAID! LoL!
ydoucare
join:2003-03-12
Lafayette, IN

ydoucare to The Dv8or

Member

to The Dv8or
said by The Dv8or:

said by twinkledee12:

this disturbs me. at&t should be selling the phone for the cost of the phone plus whatever the cost of distribution is. this makes me wonder what other providers are charging more than what the phone actually costs to make. the fcc and congress defiantly should look into this.
Yeah! Research and development is free! Software should be free! If I can't actually see the part and buy the part, then I shouldn't pay for any of the process! Sell em wholesale! How dare Apple try and recoup their employees' salaries through sales! I shouldn't have to pay for someone else to have a job! This is America, damnit! The government should sue Apple, and make them only sell the phone for what they pay for in parts!
lmao

twinkledee......twinkledumb

David
Premium Member
join:2002-05-30
Granite City, IL

David to The Dv8or

Premium Member

to The Dv8or
LOL.... that was good....
Expand your moderator at work

DaveDude
No Fear
join:1999-09-01
New Jersey

1 edit

1 recommendation

DaveDude to twinkledee12

Member

to twinkledee12
said by twinkledee12:

this disturbs me. at&t should be selling the phone for the cost of the phone plus whatever the cost of distribution is. this makes me wonder what other providers are charging more than what the phone actually costs to make. the fcc and congress defiantly should look into this.
Equate this to you working, then think again ? My job shouldn't pay me anymore, then for lunch , gas , and rent for my home, because otherwise i am stealing from my company. What are my minimal costs. I shouldn't have cable, computer, etc. I should only make what the cost are for me to do my job. I think someone should look into this... -sarc --

Logan 5
What a long strange trip its been
Premium Member
join:2001-05-25
San Francisco, CA

Logan 5

Premium Member

As long as there are

Fan bois and fan gurls willing to pay any price to have the latest trinket from [insert Co. name here] There will be Companies like AT&T more then ready to charge what ever their Credit Cards will bear for the "privilege" of long activation waits and crappy service from an overloaded network....

No Thank You, I'd really rather not.

DaveDude
No Fear
join:1999-09-01
New Jersey

DaveDude

Member

apple vs Pc

Cant the same argument be used to describe a mac and a pc ? They bought could run the same software, by why are macs more expensive ?

Luna Saisho
@charter.com

Luna Saisho

Anon

Cost for parts, but...

These cost for parts things bug me. The reason is that this is how much the parts that make up this phone are worth. But then there's research and development, production, distribution, software (O/S) dev, etc. I don't really care that this is an iPhone, just that I find that this particular type of report is misleading, causing people to think the wrong things.

There is a lot more to it then simply the parts.
kylemorris
join:2007-12-14
Richardson, TX

1 edit

kylemorris

Member

its like the cable market

The price for a 6 ft HDMI cable is 30$ when in reality it only cost
3$. People get in business to make a profit, thats what Apple is doing and that is what AT&T is doing. If you don't like the price point then don't buy it.

furlonium
join:2002-05-08
Allentown, PA

furlonium

Member

Re: its like the cable market

said by kylemorris:

The price for a 6 ft HDMI cable is 30$ when in reality it only cost
3$. People get in business to make a profit, thats what Apple is doing and that is what AT&T is doing. If you don't like the price point then don't buy it.
Got my 6ft HDMI cable from Eforcity for $.78

insomniac84
join:2002-01-03
Schererville, IN

insomniac84

Member

What did they leave out?

quote:
finds the 16GB version costs $178.96 to make -- just $4 more than the iPhone 3G
quote:
While the use of many iPhone 3G parts keeps the 3GS's price down, there's a few changes. Most notably, the 3GS features a $5.95 Bluetooth/FM/WLAN Broadcom chipset
So what did they leave out that costs $1.95?
kylemorris
join:2007-12-14
Richardson, TX

kylemorris

Member

Re: What did they leave out?

the secret listening device!

SpaethCo
Digital Plumber
MVM
join:2001-04-21
Minneapolis, MN

SpaethCo

MVM

Are En Dee?

What makes a 1TB hard drive more expensive than an 80GB hard drive even though the raw material and production line costs are nearly identical?

Research and Development

Gotta recoup the cost of actually developing the thing in the first place.

biggbrother
Premium Member
join:2001-11-07
Providence, RI

biggbrother

Premium Member

But How Much Does AT&T Pay?

I bet AT&T Pays Apple at least $400 per $16GB unit.
iria64
join:2003-04-14

iria64

Member

what about the 32gb unit?

What would be interesting to know is the difference in material cost between the 16gb and 32gb unit.

For the most part I would think all other production/development costs would be about the same.

NetAdmin1
CCNA
join:2008-05-22

NetAdmin1

Member

And?

Not seeing how this is news because a lot of high tech products have fat profit margins.
sonicmerlin
join:2009-05-24
Cleveland, OH

sonicmerlin

Member

Hmm

Actually I believe the point of these tallies are to demonstrate how significantly marked up the iPhone is, and how much exclusive agreements between manufacturers and wireless service providers keeps the prices of these phones excessively inflated.

If exclusivity contracts were banished (by the FCC), and every phone was available to be used with every carrier (especially when everyone adopts LTE in 2 years), the prices of products like the iPhone would fall significantly.

Remember, if the hardware costs less than $200, and the unsubsidized cost is $600, you're paying $400 (whether direct or in monthly bills) just for a mobile phone OS. That's like paying for Windows over and over again every 2 years. And I guarantee you development of a phone OS for proprietary hardware is significantly cheaper than development of multipurpose operating systems for desktops.

It would be nice to see Apple and all phone manufacturers forced to compete with each other. That way phones like my LG Dare wouldn't be freaking crippled (no Wi-Fi, WTH?) so Verizon could gouge its customers.

hayabusa3303
Over 200 mph
Premium Member
join:2005-06-29
Florence, SC

hayabusa3303

Premium Member

So

Apple wants a cookie?

ptrowski
Got Helix?
Premium Member
join:2005-03-14
Woodstock, CT

ptrowski

Premium Member

Re: So

said by hayabusa3303:

Apple wants a cookie?
That would be a iCookie.

SLD
Premium Member
join:2002-04-17
San Francisco, CA

SLD

Premium Member

Grammar?

"... there's a few changes ..."

Really? There *is* a few?
sam64
join:2006-07-31
Newtown, PA

sam64

Member

Why is this news???

I have to agree with some of the comments posted but have to ask the question - what warrants this to be news?

If every product was sold at the cost of producing it then the majority of the corporations in this world would be out of business and most of us would be unemployed.

There is a cost to product development, marketing, software, warranty, etc that is not captured in the BOM cost.

Also, whoever started this thread should know that any goos business will price their product at "what the market is willing to bear"; not what it cost. When you have a "hot" product the market is willing to bear the higher price and this gives you the money to invest in R&D and other things. When the cost becomes greater than what the market is willing to bear you kill the product. It is that simple!

•••••••
VictorWI
join:2003-05-30
Greendale, WI

VictorWI

Member

Is there an app for that?

Wanna know how much it really costs to build and iPhone? There's an app for that!

spewak
R.I.P Dadkins
Premium Member
join:2001-08-07
Elk Grove, CA
·Consolidated Com..

spewak

Premium Member

Re: Is there an app for that?

said by VictorWI:

Wanna know how much it really costs to build and iPhone? There's an app for that!
I will only buy that app. if I can stand in line a day before it goes on sale, overpay for it, then show off my goods to the other nerdnick Apple freakboyz and girls!

gigahurtz
Premium Member
join:2001-10-20
USA

gigahurtz

Premium Member

I like Apple products..

but even I am getting tired of all these iPhone discussions.
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