

IPhone 4 costs $188 to make - jordanmessina
http://techcrunch.com/2010/06/28/iphone-4-costs-188-to-make/

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donohoe
Does that include shipping, packaging, marketing, design, research, legal,
office space, utilities, software and all the rest?

Didn't think so.

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mikeryan
This reminds me of the whole thing with pharmaceuticals. pills 2-X cost $.10
to make - the first pill, however, costs millions.

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cubicle67
Unsourced claim here: saw somewhere that about 75% of the cost of medication
goes to advertising. We're taught to believe that it's the R&D that's the
expense, but it's not; it's advertising.

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moe
Sources:

[http://en.wikipedia.org/wiki/Pharmaceutical_marketing#Econom...](http://en.wikipedia.org/wiki/Pharmaceutical_marketing#Economics)
[http://www.sciencedaily.com/releases/2008/01/080105140107.ht...](http://www.sciencedaily.com/releases/2008/01/080105140107.htm)

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pixelbath
"The gyroscope chip, for example, apparently costs Apple $2.60 while it costs
$2.90 in quantities of 200,000. These disparities pop up in a number of
places, which, sadly, lends an air of WTF to the proceedings."

I'm not sure I understand this last statement. Should Apple not be getting a
higher volume discount? I assume they're buying over 200,000 single parts.

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smokinn
Given that they've already sold 1.7 million of them I imagine they committed
to at least an extra 0 on the end of that quantity number.

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duck
The actual article:
[http://www.businessweek.com/technology/content/jun2010/tc201...](http://www.businessweek.com/technology/content/jun2010/tc20100627_763714.htm)

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cubicle67
It doesn't cost $188 to make; it costs $188 for a buckets of parts :)

the 32GB iPhone 3GS used to retail in Australia for around US$850 ex tax.
Assuming Apple's usual margin of 20-30% (let's say 30), and allowing another
$50/unit for support/warranty issues, that puts the cost at something like
$560 each.

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jonknee
The iPhone has a much higher profit margin. Considering they what they sell
the iPod Touch for and how similar it is in parts, you can do the math
yourself. (The Touch hasn't been updated in a while, so we'll need to see a
Touch HD for a good comparison now.) They even give the Touch away if you buy
a Mac for college.

Another thing, Apple charges more overseas. The 3GS retailed for a no-commit
price in the states for $599/$699 depending on storage.

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duskwuff
Keep in mind that iSuppli's reports have been described (by daringfireball, as
well as others: <http://daringfireball.net/2007/07/isuppli>) as "bullshit". A
lot of their price numbers (especially the ones for unusual parts, like the
CPU and LCD in the iPhone 4) are pretty much pulled out of thin air.

~~~
jonknee
Does John Gruber have any experience in building hardware that would allow him
to reasonably claim any such teardown report as bullshit? Or did he just do
some simple math in his head and think to himself that Apple doesn't make that
much money so it must be BS? Hardware costs are just one piece of the puzzle,
manufacturing/IP/shipping/R&D/software/marketing are others.

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csomar
As another commenter noted, design, innovation, packaging, marketing,
employees and obviously profit/taxes... aren't counted here.

But yes, the iPhone is pricey if I compare it to other devices. For example,
Google Nexus One have a better resolution, memory and processor that the 3GS,
but the 3GS is more expensive.

I don't bother paying $1K or more on a phone, but at least this phone comes
with cutting edge technology from the inside (speedy processor, large memory,
Open OS...) and the outside (High resolution screen and Camera, amazing
design...)

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ericd
In what universe does this phone cost $1k or more?

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harshpotatoes
Well... If you include the money you'll spend for being in contract for the
next two years, you're probably well over $1000. But, I don't think the OP was
trying to say the down payment on the phone alone costs $1000.

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hcho
Bill of Materials is not equal to cost but it wouldn't be a Techcrunch
headline otherwise.

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twobar
Windows 7 costs $1.20 to make. 20 cent dvd + 20 cent packaging + 80 cent
booklet (or whatever is in there.)

A high end CPU costs below $3 in material costs. (Numbers purely guessed)

Given these examples I find it wrong to accuse Apple for selling the iPhone at
that price point. At least to me these "Product X costs Y USD in production"
articles sound a bit accusing.

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hdanak
How can you claim this if your numbers are purely guessed?

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ZeroGravitas
This seems low, even compared with Apple's usual high margins. Do they bump up
the standalone price to make the contract prices look better?

On the other hand it explains the iPod Touch prices which have always seemed
cheap by comparison.

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eli
Software has no value? Crap, I need a new career.

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sandipagr
If only I could get one at that price :( stuck with LG

