Monday, June 28, 2010

iPhone 4 Component Cost

According to iSuppli, a component cost of $187.51 shows that the margins are low compared to the selling price of iPhones but the costs come down significantly once economies of scale is achieved. With iPhone sales hitting 1.7 million in 3 days the cost decline doesn't seem a far cry.


The calculation of the cost does not include labor, shipping, advertising, software and patents costs.

Now that you know how to hold your iPhone 4

Another potential angle of utilizing a low price strategy, is in the leverage that the iPhone 4 commands when it comes to exclusive deals with carriers. Having created an exclusive product, as Apple has, with eager customers willing to sweat it out standing in long lines to get a hold of the product.


AT&T subsidizes Apple's iPhone 4 to get customers to "bend over" and take its 2 year subscriptions...this is the stream that a majority of iPhone revenues are generated. Previous estimates suggest that AT&T paid about $18 per phone per month for older iPhone versions.

In 2009, iSuppli estimated that components/materials for the iPhone 3GS cost around $179. The materials costs on that device have since dropped 25% (or $134) as the prices of certain components have declined, Keller said. The iPhone 3GS still sells for $99.

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