An estimate of the bill of materials for Apple's iPhone shows the popular computer maker may be in line for fat profits on its upcoming new product.
iSuppli, a market analysis firm known for its tear-downs of electronic products, estimates a 4-Gbyte version of the iPhone will cost approximately $245.83 to build, while an 8-Gbyte model will run the company $280.83. Apple plans to sell the 4-Gbyte version for $499 and the 8-Gbyte model for $599.
“From our assessment, it appears to be priced very high,” says Eric Pratt, senior director of iSuppli. “They're targeting the 1 percent of the market that's willing to pay for the mystique or status of owning an iPhone.”
Demand for the new Apple phone is expected to be huge, mainly because it combines the already popular iPod music player with GSM phone functionality. Analysts at iSuppli estimate iPod functionality for the 4-Gbyte iPhone will cost $68.60, while 8-Gbyte iPod functionality costs $103.60. Printed circuit boards, displays, GSM phones and batteries constitute the remainder of the iPhone costs, and are equal for both models.
To be sure, iSuppli didn't tear down any iPhones, since none will be available until June 2007. But past experience in tearing down mobile phones and other handheld products, including the iPod, led iSuppli analysts to reach their conclusions about the new device's costs.
“We feel we were able to come up with a fairly accurate cost assessment based on the information that was already out there,” Pratt says. “We've looked at a lot of Apple products in the past, so we have a pretty good feel for their supply base.”
Apple isn't commenting on its latest product, preferring to wait until the iPhone reaches the market before talking to the press and to analysts. The company has said, however, the new phone will offer a widescreen version of the iPod, along with such features as Visual Voicemail and a multi-touch display that lets users control the iPhone with their fingers. Apple has said the technology involves the use of advanced sensors, such as three-axis accelerometers and ambient light sensors.
“The display and the software will present a challenge,” Pratt says. “But it's not too big a challenge for Apple.”
| iPhone Cost Estimates: |
|
4-Gbyte Model
|
8-Gbyte Model
|
| iPod player functionality |
$68.60 |
$103.60 |
| GSM/EDGE interface |
$19.25 |
$19.25 |
| Other PCB components |
$37.20 |
$37.20 |
| Display |
$33.50 |
$33.50 |
| Battery |
$5.20 |
$5.20 |
| Other |
$82.08 |
$82.08 |
| Total |
$245.83 |
$280.83 |
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 iPhone's material costs will be far lower than its selling price. |
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