BusinessWeek: Apple’s iPhone Costs Drop
Good news for Apple, and neutral for consumers: per BusinessWeek, the manufacturing cost for the Apple iPhone 3G has been reduced by over $50 from the comparable iPhone first generation models. The 8GB iPhone manufacturing cost was $226, while the 8G iPhone 3G is only $173. Most components are shared between models, but Apple's bulk buying power has bought a reduction in cost on some items, in particular flash memory. 8GB memory is running Apple $23, while the 16GB costs them about double that. This $23 expense nets them a $100 difference in retail price though, so it's a pretty good deal for them!
Given the large subsidy AT&T is paying for the iPhones, Apple's going to do very well inspite of the loss of the revenue sharing agreement they had with AT&T. It's probably a better deal instead though as they get that money front-loaded instead of on the back end. I think Apple makes a lot of questionable business decisions, but they've done very well in spite of those questionable decisions, so they're still sitting pretty, especially as compared to the previously constant expectations that they would fail, in the late 80s and 90s.
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