iPhone 3G real worth is only $173

Those misterious drapes surrounding the "cheap" price of the new iPhone 3G, are being lifted one by one everyday. Where at first we can only predict that the low price is caused by the cheaper materials used by Apple to make its next gen iPhone, due to be launch on July 11th.

But this time iSuppli give out preliminary analysis from inside the iPhone 3G, by tearing down each components and its cost structure.
So after the virtual teardown is finished, iSuppli concluded that the Bill of Materials (BoM) and manufacturing of the 8GB iPhone 3G are only cost Apple around $173 only. But the figure doesn't include other costs such as software development, shipping and distribution, packaging, and miscellaneous accessories included with each phone.

The most expensive component on the iPhone is the 8G bytes of NAND flash memory storage, at $22.80, followed by the touchscreen at $20. While the main players (read: components) like HSDPA Digital Baseband only priced at $15, and the GPS only at $3.6!

On the right, is the picture of the first iPhone being tore apart and analized. Click the thumbnail picture to view it larger.

“At a hardware BOM and manufacturing cost of $173, the new iPhone is significantly less expensive to produce than the first-generation product, despite major improvements in the product’s functionality and unique usability, due to the addition of 3G communications,” said Dr. Jagdish Rebello, director and principal analyst for iSuppli.

Besides the low cost of above materials & components, other factor is that mobile phone service providers will subsidize the handsets by paying Apple about US$300 per unit. With the second-generation version, Apple is not garnering any service revenue, making it more imperative that the company cut a profit on the actual hardware through the carrier subsidies.

“Hardware is vital to Apple profits, valuation and revenue in the consumer-electronics and wireless communications realms,” Rebello said “In fact, two-thirds of Apple’s revenue from the iPod still is derived from hardware, while only one third is from the iTunes service and accessories. The second-generation iPhone is no exception.”

iSuppli also has observed that Apple’s iPod and iPhone products typically are priced about 50 percent more than their BOM and manufacturing costs. With the new iPhone sold at a price of $199 and the estimated subsidy of $300, Apple will achieve an even higher BOM/manufacturing margin.
And how about the future pricing? Where like any electronic products, the price will decline along with their age. iSuppli again is predicting that the 3G iPhone’s BOM costs will decrease over time as component prices decline.

The BOM/manufacturing cost of the second-generation iPhone will decrease to $148 in 2009, down 37 percent from $173 in 2008, according to data from iSuppli’s Mobile Handset Cost Model (MHCM). “If the 3G iPhone design is unchanged, the cost will decline to $126 in 2012” said Tina Teng, wireless communications analyst at iSuppli.

While on another news leak from PCW Business Center: Taiwan's Hon Hai Precision Industry, the world's largest contract electronics manufacturer, is making the new iPhone at factories in China.

If you're one of those who think the iPhone 3G price tag is still too high for you, perhaps you're willing to wait beyond 2012 where the price tag will be at $100? Oh, I don't think so. ;-D ~LOL~

[blogged with my Treo 750v]