The real cost of the new 16GB iPhone 3GS is US$178.96 which is just $4.63 more expensive than the previous iPhone according to the guys at component research Company iSuppli who take apart gadgets in an effort to find out how much they really cost to build.The only problem is that OZ buyers will be paying double this as of tomorrow.
While the new phone looks the same there are key differences claims the research Company. The new 16-gigabyte iPhone 3GS actually costs slightly more to build than last year’s iPhone 3G. However this is much lower than estimates for the first-generation iPhone, which pegged the cost at $220.
The main reason that costs may have gone up is that the price of NAND flash memory which during the past 12 months has seen prices fluctuated significantly. Late last year Apple did a $100M deal with Samsung for the supply of NAND Flash memory for their new iPhone and iPod players.
The 3GS comes in 16- and 32-gigabyte varieties, whereas the prior model topped out at 16 gigabytes. “It used to be that Apple could plan on doubling the amount of memory each year for the same cost,” says Andrew Rassweiler, iSuppli’s teardown manager, in his latest report.
In the 16-gigabyte model of the 3GS, the cost of the NAND chips is $24, he says, and $46 in the 32-gigabyte version.
Apple keeps costs low by doing big deals. In November 2008 the Company cut a $5B deal with LG for the supply of display screens including new OLED screens which are expected in both iPhones and iPods later this year.
Apple is also is one of the world’s biggest consumers of NAND flash memory, and has cut strategic supply deals with the likes of Samsung and Hynix and Toshiba who appear to be supplier of Flash memory in the devices being shipped to Australian carriers.
“Apple has been one of the key players in driving the cost of flash memory down,” Rassweiler says. “In doing so, they’ve also benefited from the price erosion over time.” But with demand for flash declining amid a recession, manufacturers have cut back production to the point that prices have started to rise, though demand has yet to pick up. ISuppli is forecasting that overall the market for NAND flash memory will contract to $11.5 billion from $11.7 billion in 2008, before growing again in 2010.