Verizon iPhone costs $16 less than AT&T's version in parts
updated 02:45 pm EST, Thu February 10, 2011
iSuppli shows Verizon iPhone costs 171.35 to make
Apple has managed to lower the cost of making the Verizon iPhone by a wide margin, iSuppli found in a new cost breakdown. While superficially similar, the CDMA version costs just $171.35 to build, or just $16.16 less than the AT&T model's $187.51. Many of the savings come from the new Qualcomm MDM6600, which includes its own GPS receiver and has saved Apple the cost of the separate Broadcom chip.
Prices are also likely to have come down through new parts or a gradual reduction in price. Apple is using the same basic Broadcom BCM4329 chip for its Bluetooth and Wi-Fi, but the Murata update is smaller. Certain components, such as flash memory, tend to go down in price on their own as economies of scale take effect.
The analysts also noticed design changes that weren't necessarily cost savings but which could affect functionality. Bluetooth and Wi-Fi now have their own antenna instead of having to share it with the rest, giving GPS more of a link of its own. The separation may also help with reception by providing a diversity antenna that improves reception and reduces the likelihood of a hand grip weakening the signal.
Most components are still familiar. The most expensive is the 16GB of Samsung flash memory, which at $40.40 was nearly a quarter of the price. The 960x640 LCD is still the next most costly at $37.80. Toshiba is now believed to be a second supplier for the screen after LG Display and has helped fuel suspicions that Apple was investing in Toshiba factories for future displays.
As with other teardowns, the costs only amount to the basic costs of parts and don't necessarily include assembly, marketing, patents, research or other factors that go into the device. Apple usually charges about three times as much both to recover other costs and to keep its usual 35 to 40 percent profit margin. Verizon is charging a $50 premium over AT&T for an off-contract device at about $650 but may be trying to offset the hit from an absence of guaranteed service.
