Apple iPhone 3GS Costs $179 to Make

Authored by Mark Hefflinger on June 25, 2009 - 10:11am.

El Segundo, Calif. - Apple's (NASD: AAPL) iPhone 3GS costs about $179 in total to make, including materials and manufacturing costs, according to a teardown of the device performed by market research firm iSuppli.

The costliest part on the new iPhone is the 16MB memory chip ($24), followed by the 3.5-inch display ($19.95) and touch-screen assembly ($16).

The total works out to be about $4 more than it cost Apple to build the previous iPhone 3G model.

Apple is paid $600 by AT&T for each iPhone 3GS, which the carrier then subsidizes down to as little as $199 for customers who sign a two-year service contract; Apple then, makes about $400 per unit in profit on U.S. sales of the device.

According to iSuppli, the iPhone 3GS is about $20 more expensive to build than the recently released Palm Pre.

Published in DMW Daily, June 25, 2009

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It's not ALL profit

Submitted by nasheesh (not verified) on June 25, 2009 - 5:01pm.

As quoted from article: "Apple then, makes about $400 per unit in profit on U.S. sales of the device." I don't doubt that the iPhone 3GS cost $179 to make. As numerous reports have shown, if you break down the cost of each and every "ingredient" to the phone, they sum up to this numbern. That's fine, and it's totally relevant to the components of the physical phone, but it's only a small part of the equation. What about all the other "ingredients" that went into creating this phone, and into creating any technological device? Consider the cost of the research and development. Consider the cost of the technical staff who support the phone. Consider the cost of the accountants, the marketing staff, the cost of the building they all work in, the energy bills, their employee's heath care, and the legal team who wrote the terms and conditions No, this is not a sob story about how "Apple has it so hard." Not at all, I'm sure they do just fine. But to call the remaining $400 "profit" is to simply ignore the realities of what it means to run a hardware and software company in 2009.