“The total cost of materials used inside the latest iPhone [8GB] is $174.33, a dollar and change higher than the preliminary estimate iSuppli made in June, about two weeks before the phone was actually released. If the analysis is correct, Apple is spending about $53 less on materials than it did with the first iPhone, which iSuppli says costs $227 to make,” Arik Hesseldahl reports for BusinessWeek. “After accounting for a subsidy from AT&T, iSuppli reckons Apple makes a per-unit gross profit of 55%.”
MacDailyNews Note: iSuppli estimated only the total cost of materials and does not factor in R&D, assembly, marketing, packaging, and other costs associated with Apple’s iPhone.
“Many of the companies supplying parts for the latest iPhone have remained the same, iSuppli found. German chipmaker Infineon appears to have been a big winner, however, supplying parts that power some of the new features in the second version of the handset. Infineon supplied both the 3G wireless chipsets—the chips that allow the phone to work with fast wireless data networks—and the chips that enable navigation via global positioning system satellites,” Hesseldahl reports.
“At the heart of the wireless chipsets are two cores—the central brain of a chip—that come from ARM Holdings (ARMH.O),” Hesseldahl reports.
More about what’s in the iPhone here.
Eric Savitz reports for Barron’s, “Friedman Billings Ramsey analyst Craig Berger notes that Marvell is supplying the WiFi chips for the phone, as expected, and that Linear Technology is supplying the battery/USB charger, again as expected. He notes that Skyworks provides a power amplifier module, and that Cambridge Silicon Radio ‘is the Bluetooth winner.’ He concurs that Infineon is ‘the biggest winner.'”
Full article here.
…..and the best part of having elephants do the programming, they work for peanuts.
Just gotta love these guys. Hand all these parts to a MS person and see what they build.
@Think,
Good one.
$174.33??? So what does this mean? How much research was done? How much marketing? How much are the wages at Apple?
I have a bicycle for which the materials cost all of $32.80. The thing retails for $486.00. This info about costs means sweet f- all.
Too bad dissection does not uncover the cost of R&D;!
“Hand all these parts to a MS person and see what they build.”
Ask them to adapt a Beckett play and they’ll churn out “Waiting for Bidet”.
@Ampar:
You, Sir, made me laugh out so loud, my co workers thought I was crazy laughing by myself…
You folks miss the point-
Material costs are recurring costs. They are fixed for each unit made. (packaging costs are also recurring, although not mentioned in the article.)
R&D;, engineering, marketing, etc. costs are non-recurring. They happen whether Apple sells 1, 100, 1000, or 1,000,000 units. (OK, so marketing, particularly advertising, may be something of a function of units sold.)
BOTH are important in divining how much Apple is making on ALL the iPhones sold.
It’s just Business 101.
I thought Samsung made the main processor, which is an ARM design.
@Ampar:
Which Bidet? Brigette Bidet? As in, Godot Brigette Bidet?
A weird question but when I visit MDN on my iPhone there is a red link at the top just under the date, time stock header that says “Visit mobile MacDailyNews.com”. I click it but it just takes me to the page I’m reading. Why or what is the link really suppose to do?
I have an uncle who know someone divorcing Zsa Zsa Gabor, he was ordered to give her the Rolls Royce as one of the items in the divorce settlement.
So he delivered it to her. On her lawn.
Every
Single
Piece!
In other news, Intel just announced their Centrino 2 (Montevina) platform which incorporates a faster Penryn Core 2 Duo processor, faster bus speed, faster integrated graphics (GMA X4500) and the option of WiMax support.
(silverwarloc –
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and Digits McGee – I think it was from Godspell, “Day Bidet”?)
@Ampar:
…and I thought I was milking it…
“MacDailyNews Note: iSuppli estimated only the total cost of materials and does not factor in R&D;, assembly, marketing, packaging, and other costs associated with Apple’s iPhone.”
R&D;and Marketing are expensed, as incurred, in other areas of Apple’s financials. Packaging and assembly are proper COGS (Cost of Goods Sold) items. The only “other” cost that would be meaningful is freight to the customer.
@ Gil,
It should state visit full MDN site instead of visit mobile MDN site
@qka, I believe it it you who are missing the point. The long standing objection to reporting on iPods and, more recently, the iPhone, is the manner in which the media are comparing only the materials cost to to the gross price of the end product. They make it sound as if Apple is pocketing several hundred bucks per unit.
I do agree with you that there are fixed variable costs associated with the iPhone, although I would not include marketing in the nonrecurring/fixed side of that list. There are other variable costs that have not been mentioned including product engineering support and warranty support. To do a proper job of this we need a better accounting of the end-to-end process, from cradle to grave including take back and disposal, amortized and converted to present dollars to compare to the sales price.
On their own, the iSuppli numbers are just for fun.
meant to type “fixed *and* variable costs associated with the iPhone”
Based on information from a Wired survey in 2003:
How much is a human body worth?
“When broken down into fluids, tissues and germ fighting our bodies are worth more than $45 million.
[The survey] found that vital organs are no longer the most valuable body parts. Rather, bone marrow heads the list priced at $23 million, based on 1,000 grams at $23,000 per gram.
DNA can fetch $9.7 million, while extracting antibodies can bring $7.3 million. A lung is worth $116,400, a kidney $91,400 and a heart $57,000.
Women’s eggs are costlier than men’s sperm. The survey found that a fertile woman could sell 32 egg cells over eight years for $224,000; however, for a man to earn the same amount, he would have to make 12 sperm donations a month for 20 years.
The prices are based on cost estimates taken from hospitals and insurance companies, and are based on projected prices only in the United States. Of course, the prices also assume that all these substances can be extracted from living tissue for sale.”
So much for that humans are priceless bullshit.
(R&D;, assembly, marketing, packaging and other factors were not considered.)
Who cares? What ist the total cost of materials of a Toyota Corolla? Anybody interested?
“he would have to make 12 sperm donations a month for 20 years.”
Would you take 2 donations a year over 3 years?
“Would you take 2 donations a year over 3 years?”
Only if you promise to stop hanging out in our lobby. You’re frightening the regular donors. This isn’t a library, buddy.
The other factor iSuppli misses are Apple negotiated supplier volume discounts. Think Apple is putting $175 in parts into a $199 phone? Think again.
I just had a pizza, i payed 15 dollars, the ingredients cost 1 dollar.
@ KingMel
I recently came across someone online who claimed to be an experienced manufacturing person, and he wrote that the standard calculation for the sale price of a manufactured item is the cost of the materials times pi – 3.14. The number is supposedly coincidence.
Don’t know know how true that is.
Only the ignorant, and ignorant reporters, do not realize there is more to the cost of production than just the cost of materials.
There are fixed costs per unit, one time nonrecurring costs (R&D;, etc.), and variable costs like marketing. The the smart one know this; this rest run their mouths.
Since Apple is so famously guarded with their numbers, the cost of materials offers insights into other costs, when comared to the sales price.