iPhone

Apple iPhone 4 costs $188 to build

According to iSuppli, the Apple iPhone 4 contains about $188 worth of parts. Bill Detwiler cracks open the iPhone 4 to see the hardware inside.

Photo Credit: Bill Detwiler / TechRepublic
Photo Credit: Bill Detwiler / TechRepublic
According to market research firm iSuppli, the hardware used to make the Apple iPhone 4 costs about $187.51 (US). iSuppli analyzed a 16GB version of the phone.

The iPhone 4's cost is consistent with previous iPhone versions, as Apple has tried to keep the cost between $170-$180. "Over the years, the iPhone has generally tended to hover in the $170-to -$180 cost range because Apple seems to be trying to hit some kind of budget," said iSuppli's Kevin Keller in an interview with Businessweek.

What's the most expensive iPhone 4 component? According to iSuppli, the phone's 3.5-inch "retina display" tops the price list at $28.50. Next in line, is the 16GB Samsung NAND flash memory chip at $27.00. The A4 processor, manufactured by Samsung costs less than half of the display or the phone's memory at $10.75.

For an in-depth look at all the hardware inside the iPhone 4, check out our extensive cracking open photo gallery. Unlike the iPhone, iPhone 3G, and iPhone 3G S, the Apple iPhone 4 was remarkable easy to disassemble. And, we walk you through the entire process.

Photo credit: Bill Detwiler / TechRepublic

Photo credit: Bill Detwiler / TechRepublic

About

Bill Detwiler is Managing Editor of TechRepublic and Tech Pro Research and the host of Cracking Open, CNET and TechRepublic's popular online show. Prior to joining TechRepublic in 2000, Bill was an IT manager, database administrator, and desktop supp...

25 comments
SwissJon
SwissJon

Look.. In the end, Apple make a product that costs them $188 in hardware, and I've no idea how much in software development costs, and they make a profit from it. Big deal, that's capitalism. You spend your hard earned cash on a piece of electronics because it's "a la mode" and moan because in 6 months time it's old hat and you need something else to keep you amused.. So who's the sucker?

jeb.hoge
jeb.hoge

"Bill Detwiler cracks open the iPhone 4 to see the hardware inside." Step 1: Drop iPhone. [oops]

Gis Bun
Gis Bun

So Apple scr?ws the public buy selling a phone for 50%+ profit plus what they make on the plans plus what they make on the App store, accessories etc. It's like when Apple sells it's AirPort Extreme for $180 but you can get a DLink or Cisco equivalent for $100 or less. Now who's making a huge profit?

ian
ian

who is making how much? People spend too much time worrying about what others are getting (profit or whatever) out of a deal and not enough about what they are getting. People Think Too Much About Cost And Not So Much About Value. Next time you go to buy an item, any item, ask yourself ?what value does it give me?" If you think the value to you is worth the cost you will pay, then the price is right for you. For me, eye candy or bells and whistles do not provide any value. Functionality and reliability do.

Hazydave
Hazydave

The MSRP on the iPhone runs like $599 or more, depending on model. You don't pay that, because in theory, the AT&T price is subsudized... that why folks are willing to take the two-year contract. Of course, trhe MSRP is kind of a made-up price anyway... and iPhone sold at normal CE markups would be $40-$60 more than the equivalent iPod Touch. And Apple's getting far more margin on those than Sandisk or Creative Labs get on their PMPs. Apple has paid hundreds of millions over the last 30+ years to convince the public they're a high end brand. Marketing is all about perception. So they sell wifi hubs and PCs for 2x-3x the price of some of the other guys. For that, you get exactly the same performance, probably fewer features, a really pretty case, and exclusive membership in their club. They're not ripping anyone off.... you have plenty of other options. Some years back, I bought an HP laptop for $1200... the exact same thing from Apple had fewer ports and cost $3000. So I didn't buy the Apple. Those who did hopefully did with eyes open, and felt whatever the Apple cachet gives them was worth and extra grand+. As for phones... I'm happy with my Droid. Cost me $100... Motorola's unbundled MSRP was $599.

kaninelupus
kaninelupus

Now I'm NEVER the first to credit Apple for ANYTHING (have to work with stinking Macs on a daily basis, and find it a constant pain in the proverbial), but 50% mark-ups are FAR below average. Take fashion-retail (had to pay for the studies somehow!) the basic mark-up is [b]100%[/b] of wholesale (cost plus GST/Tax); ie, a garment with a wholesale price of $90 plus 10% tax would retail for $199. Premium items, such as leather goods, almost ALWAYS get a higher mark-up (think Hugo Boss belts, wallets etc), as the typical purveyor of these items seems to think something must be wrong if the item at hand is priced below what they are expecting, or resent the thought of such luxury items being affordable to the "commoner". The fact that Apple, a company [i]known[/i] for pricing their wares for the luxury market, is marking their iPhones at such a low level, should hardly be classed as ripping off the consumer. You might like to check your facts before mouthing off!

jpbmdb
jpbmdb

It looks like the title of this article might be a little misleading, and it certainly doesn't take into account the other costs of doing business. Someone has to put these parts together somewhere and that costs money. This doesn't take into account design and engineering costs or overhead such as administrative costs. The price of the parts themselves doesn't tell the whole story. As Palmetto said, a 50% markup over the cost of parts themselves may be a good deal when compared with other "socially accepted" products in this day and age.

CharlieSpencer
CharlieSpencer

Apple isn't screwing the public any worse than many other product sectors. Actually, a 50% markup is a bargain compared to cosmetics. Soft drinks, sports drinks, energy drinks? The container often costs the producer more than the two or three cents worth of product inside. How many of those have you guzzled this week? Apple (and the other examples I cited, and every other company I didn't) is in business to make a profit for it's shareholders, and as much of one as the market will bear. Apparently there are enough people who find the price acceptable for the product provided or the iPhone would not continue to sell. I'm not one of them, but few consumer electronics cause me to open my wallet.

Neon Samurai
Neon Samurai

I think the Google Nexus is around 170$ or so from the first site I saw with the 188$ Iphone parts cost.

steve96785
steve96785

If I'm reading the article correctly, the $188 quoted is the cost to build the product. I take that to be parts and labor. It would not be likely to include engineering R&D, shipping, sales force salaries and/or commissions, and a whole host of other overhead costs including rent on all of those way-cool Apple stores in the priciest mall locations. I don't like grossly inflated CEO salaries any more than the next non-grossly overpaid employee, but if companies can't make a profit on every item them produce, they will soon be out of business, and we will all lose out on the opportunity to own their cool stuff. On the other hand, if they are charging too much for the stuff we want, someone else will build a competing product and sell it for less and the greedy will go out of business. At least that is how it works when the public is not so enamored of a company name, logo, or iconic celebrity pushing their products that we don't act in a rational manner. Given the incredible sales figures for the iPhone even before any real evaluations could be made and posted, I'm not certain that Apple users are actually rational buyers. I'm a PC user, and will never buy an overpriced Mac when my Windows machine can do the same tasks for a small percentage of the price, but I just got word that my iPhone 4 upgrade has arrived, so I've got to run a quick 120mi roundtrip errand to pick it up and get back to work!

Palsu97
Palsu97

Any idea how much the battery costs?

NexS
NexS

For me, the price needs to be weighed with the usability, functionality, benefit, service and warranty. If all the scales are roughly even, then I have no quarrel.

Neon Samurai
Neon Samurai

Not "what is a fair markup on top of our costs". Clothing is crazy as it can easily hit 200% above production cost.

Hazydave
Hazydave

First of all, the iSuppli people are estimating cost, based on a BOM breakdown and their numbers on quantity pricing. But a company like Apple is privately negotiating these prices, based on volumes few others can match. So it might well come out lower still. As for cost, in a modern automated factory, there isn't much labor cost per unit. They use Foxcon in China, who until recently was paying low wages even for China. Given what I've paid per unit on assembly in the USA, I'd be shocked if they paid even $10 an iPhone. Add another buck to ship it back to the USA. In short, this is probably a very good number.

Zahra B.
Zahra B.

"If I'm reading the article correctly, the $188 quoted is the cost to build the product. I take that to be parts and labor." Actually, first paragraph : "According to market research firm iSuppli, the hardware used to make the Apple iPhone 4 costs about $187.51 (US). iSuppli analyzed a 16GB version of the phone." So, you'd need to add labor, transport, importation tax, etc. I suspect when you add all that, the costs gets higher. What I'd like to see (I haven't bothered searching) is the parts price of an equivalent iTouch. Don't forget that there's a 500$ difference (in Canada, at least) between a 16GB 3GS and a 16GB 3rd gen iTouch (until we get iPhone 4).

Neon Samurai
Neon Samurai

With Apple's legal action against other mobile phone makers, they are already pushing a chilling affect in the market for anyone who would try to deliver a price competitive product. If it's not the hardware patents (some rational basis for existence) then it'll be the software patents they try to litigate with. Legal action is just another business strategy to maintain high barriers to competition sadly.

Slayer_
Slayer_

Should coke be sued then for ever making new coke, which was basically pepsi? Unless if course this new phone is called iCell

bboyd
bboyd

and get sued. Most consumer products are irrational purchases with limited utility and exist only to consume time and mollify sheepish brains. I mean that's why I bought my Wii and big screen TV.

Neon Samurai
Neon Samurai

And I do that very thing. Sadly, much of the market doesn't vote with there wallet, especially in the tech market.

Neon Samurai
Neon Samurai

within the last few years even. Our dollar was much higher with no reduction in price while US prices bottomed out along with the dollar. It could have been worse; you could have primarily sold hardware to the mining industry.

Neon Samurai
Neon Samurai

shareholders would define "fair" as cost plus "as much as we can milk out of the market without loosing a detrimental amount of sales". where I can only view it from the consumer point of view which puts "fair" at costs plus a reasonable degree of compensation for the merchant's efforts to deliver the product. I think it would also be less of an affront to the consumer if the markup applied throughout the supply chain rather than dirt cheap through the supply chain until the retail stage where it gets the absurd percentage applied.

Slayer_
Slayer_

When my family was an arctic cat dealer. th eamerican prices were less than half ours. Even when our dollar was above the american dollar. With all of canada bitching, the cat ceo just said and this is a quote "The price is what the canadian market will bare". yeah, thats why nearly all cat dealers are now gone and nearly everyone buys their cat in the states. i can't blame em, what is 15k here, is only 7k in the states. Their full retails is significantly lower than our cost. oh, and we'd be forced to honor warranty, at least the other brands weren't [b]that[/b] stupid. But even if every dealer refuses warranty. the customer could buy 2 for the price of one and use one for parts if needed. it's the manufactuers that make a killing on the product, not the retailer. it seems average retail markup is about 10% or less. [u]Most[/u] electronics are even less. 3-7% markup.

CharlieSpencer
CharlieSpencer

I bet your definition is significantly lower than how a shareholder defines it.