‘IHS iSuppli’ today published the results of its ‘tear down’ analysis of the Verizon iPhone. The iDevice launched this week, and now available countrywide, has a bill of material (BOM) cost of around $171.35, about 9% less than the original iPhone.
The analysis conducted by the ‘iSuppli’ team indicates that although the Verizon iPhone has the same functionality and – at first glance – a similar bill of materials, “the new code division multiple access (CMDA) version includes significant changes in its design and component selection.”
‘iSuppli’ notes that the original iPhone4 carried a BOM of $181.75, but the iDevice launched on February 10 carries a BOM of 9% less – the production cost for the CMDA iPhone4 pushes this price up to $178.45.
As previously reported and highlighted by ‘AppleInsider’ the new iPhone has a new design inside which helps Apple achieve this 9% reduction in costs.
The most notable change is the adoption of the MDM6600 world-mode base-band chip from Qualcomm which offers integrated GPS circuitry, enabling the Cupertino-based company to eliminate the Broadcom GPS chip used in the previous iPhone4. The ‘iSuppli’ report further notes that the Wi-Fi combo chip module was also revised – it is smaller and the component supplier has made some significant improvements.
So Apple manufactures the iDevice for only $171.35 and sells it for a starting price of $300? That means that Apple is…? Whoa, stop the bus! The ‘iSuppli’ BOM estimates cover only the cost of the individual hardware components, with an additional amount added on to reflect estimated manufacturing costs. Their figure does not include costs such as development, software, patent licenses, marketing and distribution. Proof that Apple can produce a successful product in a very competitive market.