The much anticipated iPhone 3G apparently costs less to make than its predecessor. iSuppli released a report concerning the first round of a preliminary “virtual teardown” of the phone’s hardware and reported that the Bill of Materials (BOM) on the 8GB model is only $173. That is pretty extraordinary considering the next-gen iPhone is loaded with new features and is now well equipped to take advantage of AT&T’s 3G network.
Dr. Jagdish Rebello, director and principal analyst for iSuppli, said in the report that the original 8GB iPhone cost $226 even after the components were reduced in price, “giving the new product a 23 percent hardware cost reduction due to component price declines.” Rebello added that the new 3G phones are going to be sold at a subsidized rate, which follows standard business practice in the mobile-handset market.
Since Apple won’t be receiving shared subscription revenues from AT&T, iSuppli estimates that the iPhone 3G will be sold to carriers at $499 per unit ensuring that there is some returned revenue. That means that carriers will rely on inevitable higher service and data fees to compensate for their loss.
Like most electronic products, the iPhone’s BOM cost will decrease with time, anticipates iSuppli, bringing the cost of the components down to $148 in 2009.
