iPhone 3G costs £51 to make - Apple still making a profit on sales

EETimes has been speculating about the manufacturing cost of the iPhone 3G and has come to the conclusion that it costs around half as much to make as the original model.

Expert analyses of the first iPhone resulted in a best-guess bill of sale for components of $170 – the iPhone 3G’s components are estimated to cost a mere $100 (or £51 at the prevailing exchange rate).

The manufacturing cost cuts are thought to be the result of both engineering improvements to the iPhone’s sophisticated touch-sensitive screen (it’s most expensive component) and the tumbling price of flash memory.

The screen in the original iPhone was thought to cost around $60 – the one in the iPhone 3G is estimated to cost half that. The addition of 3G and GPS features don’t add much to the price either, and estimates are that that combined total for these two chips is a mere $20.

Of course these cheaper manufacturing costs don’t equate to even more profit for Apple – the aggressively low price of the iPhone 3G ($199) make it clear that Apple is more interested in bagging a bigger share of the smartphone market than making pots of money.

Based on the estimated manufacturing costs of the first iPhone, Apple made a gross profit of around $229 on each 8Gb model sold – the profit on the iPhone 3G is reckoned to be just $99 per handset. Of course the lower purchasing price will almost certainly mean that iPhone 3G sales will outstrip those of the original model, so Apple is unlikely to end up losing much money in the long run.

[ EETimes via VentureBeat]