Device teardown experts at UBM TechInsights say the iPhone 4S’s bill of materials (BOM) is similar to the iPhone 4 model launched last year, estimating that the 32GB version costs around $203 to build. So, when Apple sells an iPhone 4S for $299, $96 will be pure profit.
Above is a look at just the costs of the iPhone 4 and 4S broken out, but click here for a larger chart to see what's changed in the new iPhone 4S.
Table 1: Apple iPhone 4 (GSM) & iPhone 4S Estimated BOM
|iPhone 4 8GB (GSM)||iPhone 4S 32 GB|
|Display & Touchscreen||$31||$31|
|Baseband & Cellular Radios||$16||$24|
|Source: UBM TechInsights|
Even though Apple disappointed a lot of people who got sucked up in the iPhone 5 hype, its incremental approach makes a lot of sense. For one thing, sourcing already available parts to previous generations should help ensure there aren’t any delays, and David Carey, TechInsight’s VP of technical intelligence, says using long-yield components will keep costs down for Apple to achieve economies of scale on parts it's already invested engineering in.
“They are slow to reduce retail price, but try and stay current on innovation curve consistent with flat cost to produce,” Carey explains.
Jeff Brown, VP of business intelligence at TechInsights, adds that Apple also eliminates SKUs to help keep costs down, as it did by making the iPhone 3G S free and now only offering the 8GB iPhone 4. More consumers will upgrade to iPhone 4S for the expanded memory and new features, but Apple will still reach more price-sensitive users as well.
“It’s cost effective to address a large available market for consumers from high-end bleeding edge to the technology holdout,” Carey says.
— Sarah Reedy, Senior Reporter, Light Reading Mobile