The 8GB iPhone 3G costs Apple Inc. about 173 U.S. dollars to make, compared to 226 dollars for the first-generation iPhone, according to an estimate published by research firm iSuppli Corp on Tuesday.
The new phone featuring faster Internet speeds and an improved navigation goes on sale for 199 dollars on July 11.
Apple's profit, however, is much more than the 26 dollars difference between the cost and retail price, as the retail price is subsidized by the exclusive carrier, AT&T Inc.
ISuppli estimates that AT&T will subsidize each phone by 300 dollars, while other analysts have put it at 350 dollars. The carrier will earn the subsidy back through monthly service fees.
Apparently, the biggest money maker is the 16GB variant of the iPhone 3G. The extra Flash memory costs Apple 23 dollars, but adds a full 100 dollars to the retail price.
New parts in the 3G model are the Infineon 3G chipset and Broadcom subsidiary Global Locate's GPS unit. However, the cost of Samsung processor, flash memory, and many other components has come down and offset the new parts.
The cost estimates don't include software development, packaging, shipping or accessories like headphones.
Source: Xinhua\agencies
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