Apple's CDMA iPhone 4 components cost $171, $16 cheaper than GSM phone
An analysis of the components inside Apple's new 16GB Verizon-compatible CDMA iPhone 4 has found a $171.35 bill of materials, suggesting Apple has reduced the cost of its handset when compared to the GSM model released in 2010.
iSuppli on Thursday announced the results of its analysis of the new CDMA variant of the iPhone 4. The teardown found "significant changes in its design and component selection," which helped to reduce the price by more than $16 from the $187.51 estimated cost of the AT&T-compatible GSM iPhone 4.
The most expensive component of the 16GB CDMA iPhone 4 -- which sells for $199 subsidized with a two-year-contract -- is its memory, costing an estimated $40.40 for NAND flash and SDRAM. The high-resolution Retina Display is the second most expensive component, with an estimated cost of $37.80.
The two most expensive components apparently appear unchanged from the previous version of the iPhone 4
iSuppli revealed earlier this week that the new iPhone 4 has an improved antenna design, as well as an integrated GPS chip found as part of the Qualcomm MDM6600 baseband. The baseband-GPS combo has an estimated cost of $16.41.
The CDMA iPhone 4 also features a new WLAN/Bluetooth module from Murata Manufacturing Co. Ltd., which integrates Broadcom's BCM4329 WLAN/Bluetooth/frequency modulation chip. It is the same core functional chip that has been used before, but it has shrunk in size.
"With the CDMA iPhone 4, Apple Inc. has shown once again that it never recycles a product design," said Andrew Rassweiler, senior director of teardown services for IHS. "Apple's new designs always exhibit changes, evolution and optimization. This approach is evident not only in the antenna design but also in items like the integrated GPS functionality and the shrinking of the Wi-Fi/Bluetooth combo module.
"As we dig deeper into our teardown analysis, we're certain that we will find a host of other tweaks all designed to improve quality but keep costs on a steady path of decline."
In all, iSuppli has estimated the components of the CDMA iPhone 4 to have a materials cost of $171.35. Adding in the presumed $7.10 manufacturing costs, and the total estimated bill of materials comes to $178.45.
The bill of materials estimate accounts only for hardware and manufacturing costs incurred by Apple. It does not take into consideration other expenses the company must shoulder, such as the development of software, necessary licensing agreements, or royalties that must be paid.
iSuppli on Thursday announced the results of its analysis of the new CDMA variant of the iPhone 4. The teardown found "significant changes in its design and component selection," which helped to reduce the price by more than $16 from the $187.51 estimated cost of the AT&T-compatible GSM iPhone 4.
The most expensive component of the 16GB CDMA iPhone 4 -- which sells for $199 subsidized with a two-year-contract -- is its memory, costing an estimated $40.40 for NAND flash and SDRAM. The high-resolution Retina Display is the second most expensive component, with an estimated cost of $37.80.
The two most expensive components apparently appear unchanged from the previous version of the iPhone 4
iSuppli revealed earlier this week that the new iPhone 4 has an improved antenna design, as well as an integrated GPS chip found as part of the Qualcomm MDM6600 baseband. The baseband-GPS combo has an estimated cost of $16.41.
The CDMA iPhone 4 also features a new WLAN/Bluetooth module from Murata Manufacturing Co. Ltd., which integrates Broadcom's BCM4329 WLAN/Bluetooth/frequency modulation chip. It is the same core functional chip that has been used before, but it has shrunk in size.
"With the CDMA iPhone 4, Apple Inc. has shown once again that it never recycles a product design," said Andrew Rassweiler, senior director of teardown services for IHS. "Apple's new designs always exhibit changes, evolution and optimization. This approach is evident not only in the antenna design but also in items like the integrated GPS functionality and the shrinking of the Wi-Fi/Bluetooth combo module.
"As we dig deeper into our teardown analysis, we're certain that we will find a host of other tweaks all designed to improve quality but keep costs on a steady path of decline."
In all, iSuppli has estimated the components of the CDMA iPhone 4 to have a materials cost of $171.35. Adding in the presumed $7.10 manufacturing costs, and the total estimated bill of materials comes to $178.45.
The bill of materials estimate accounts only for hardware and manufacturing costs incurred by Apple. It does not take into consideration other expenses the company must shoulder, such as the development of software, necessary licensing agreements, or royalties that must be paid.
Comments
It will be interesting to see if the battery life is better on the CDMA or the GSM phone.
Looking forward to battery tests!
Best
Couldn't this just be component costs decreasing over time?
When you add up the profits they make vs volume and also the prices of contract-free phones, the prices from iSuppli don't seem to come close. It's probably more headline news to say Apple's product only costs a fraction of what they sell it for.
An unsubsidised iPhone 4 in the UK costs £510 incl tax, which in pre-tax dollars is $684. iSuppli are making out that it costs $178 to make so there's $508 per handset going into something else. According to their profit reports compared to volumes share, it's likely they make $100-200 profit per iPhone. That leaves $308 per handset at least spent on other things.
It's possible but it seems unlikely that the bill of materials is accurate.
When you add up the profits they make vs volume and also the prices of contract-free phones, the prices from iSuppli don't seem to come close. It's probably more headline news to say Apple's product only costs a fraction of what they sell it for.
An unsubsidised iPhone 4 in the UK costs £510 incl tax, which in pre-tax dollars is $684. iSuppli are making out that it costs $178 to make so there's $508 per handset going into something else. According to their profit reports compared to volumes share, it's likely they make $100-200 profit per iPhone. That leaves $308 per handset at least spent on other things.
It's possible but it seems unlikely that the bill of materials is accurate.
The salary of Apple's employees must be paid from somewhere. I'm sure that makes quite a huge chunk of that "$308" spent on "other things".
Sounds like CDMA old technology parts are cheaper!
Actually it just meant that the GSM world completely missed the mark 10 years ago with their video calling while Qualcomm bet correctly that location-based services would be huge in the 3G world.
Sounds like CDMA old technology parts are cheaper!
Sounds like a dual-band CDMA/GSM chip is cheaper...
Sounds like a dual-band CDMA/GSM chip is cheaper...
Can you say "volume discount" and "prepaid discount"? I bet Apple and Qualcomm worked out a deal that was great for both parties.
This goes against what the analysts said a few weeks ago where they thought the component costs were going to be some $20-30 higher for each phone. Go figure.
This is a BOM and, and this is important, an estimate. There are plenty of other costs to consider that could easily put it $20-30 higher than the current iPhone 4 GSM cost.
Sounds like a dual-band CDMA/GSM chip is cheaper...
One chip does not a ?wolrd mode? make. The Verizon iPhone only employs the dual-band baseband chip, not any of the other hardware needed for this connectivity. Note that it only contains radios for CDMA, and none for GSM or UMTS.
Can you say "volume discount" and "prepaid discount"? I bet Apple and Qualcomm worked out a deal that was great for both parties.
Possibly, but the bandband chip shouldn?t be seen as a guarantee that there will be only one iPhone 5 model per storage capacity. There are plenty of other costs and I can?t see Apple wanting to pass that onto 50 million consumers that will never have a need to use a CDMA phone.
Looking at the poor battery life of the device compared to other CDMA chips for voice the Gobi chip seems inefficient. I see that as a problem when 7 hours of talktime on CDMA is really taking place on the 2G network.
Possibly, but the bandband chip shouldn?t be seen as a guarantee that there will be only one iPhone 5 model per storage capacity. There are plenty of other costs and I can?t see Apple wanting to pass that onto 50 million consumers that will never have a need to use a CDMA phone.
Looking at the poor battery life of the device compared to other CDMA chips for voice the Gobi chip seems inefficient. I see that as a problem when 7 hours of talktime on CDMA is really taking place on the 2G network.
I'm really torn on this issue.
There are a number of benefits to making a single model per capacity including additional economies of scale for components and easier inventory management (both in terms of manufacturing and a more flexible distribution channel).
But, then, I look at the likely additional costs and think it makes no sense to pay for technology in all those places where there is no CDMA. I've kind of convinced myself that this is the more rational view.
The battery argument may actually be the strongest against providing a dual-mode phone.
But I have to confess that I would really love to see Apple offer a "world-mode" phone.
One chip does not a ?wolrd mode? make. The Verizon iPhone only employs the dual-band baseband chip, not any of the other hardware needed for this connectivity. Note that it only contains radios for CDMA, and none for GSM or UMTS.
It has the physical hardware-based capability. Whether it can use it is meaningless. You don't think the chip cost more than a straight GSM or CDMA chip would?
The salary of Apple's employees must be paid from somewhere. I'm sure that makes quite a huge chunk of that "$308" spent on "other things".
That would have to be the case for all products in all stores though otherwise they'd go out of business quickly and yet other products have very small margins.
$308 per handset x 100 million handsets = $30.8b. Their cash reserves are sitting at $50b or something like that but that's mostly accounted for by the $100-200 profit already so there would have to be an additional $30.8b spent somewhere.
They have made some exclusive deals like the $3b one but $25b+ seems like a lot unaccounted for. I think the BOM is off, $17 per handset for manufacturing seems low when they laminate the glass panels and mill the aluminum.