Each iPhone 4 that Apple makes is estimated to run Steve Jobs and company an estimated $187.51, research firm iSuppli reported June 28. However, that bill of materials (BOM) tally, notes the firm, accounts for hardware costs alone and leaves out expenses pertaining to manufacturing, software, marketing, distribution, royalties and licensing fees.
iSuppli has performed teardowns of each of Apple’s iPhones – the 3GS’ estimated BOM was $170.80; the 3G, in 2008, was estimated at $166.31; and the original iPhone in 2007 was said to run Apple $217.73. During its most recent teardown, iSuppli busted out not only its calculator but a number of compliments on both the device and its designers.
“Just as it did with the iPad, Apple has thrown away the electronics playbook with the iPhone 4, reaching new heights in terms of industrial design, electronics integration and user interface,” Kevin Keller, an iSuppli principal analyst, said in a statement.
And still, said Keller, Apple cleverly managed to save a few dollars by not straying too far from past designs.
“The BOM of the fourth-generation model closely aligns with those of previous iPhones,” he said. “With the iPhone maintaining its existing pricing, Apple will be able to maintain the prodigious margins that have allowed it to build up a colossal cash reserve – one whose size is exceeded only by Microsoft Corp.”
(On June 7, however, a separate iSuppli report declared that Apple had beaten out Microsoft to become the world’s most valuable technology company, making it only second overall to oil giant Exxon Mobil. According to the report, Apple holds a cash reserve of $23 billion.)
The most expensive item on Apple’s shopping list, according to iSuppli, is the iPhone 4’s LCD display, at $28.50. It’s reportedly made of low-temperature polysilicon (LTPS) and in-plane switching (IPS) technology, and features, at 960 by 630, a resolution that’s four times better than that of the iPhone 3G S.
iSuppli attributes the unlabeled display to LG Display, adding that Toshiba Mobile Display could also be a source. Repair site iFixit, however, identified the display as Gorilla Glass from Corning in a June 23 teardown.
Second from the top is the iPhone 4’s Samsung-supplied NAND flash memory, which in the 16GB model runs Apple approximately $27 – accounting for 14.4 percent of the total BOM. Samsung is also responsible for the third-most expensive component, the handset’s 4GB of mobile DDR (double data rate) SDRAM, priced at $13.80.
More than where Apple spent its dollars and cents, however, it was the iPhone 4’s design that impressed.
Noting the integrated packaging of the iPhone 4’s radio frequency (RF) functionality, which includes an additional standard – high-speed uplink packet access (HSUPA), for uploading high-definition bandwidth – Keller wrote:
“Out of the nearly 300 cell phones torn down by iSuppli, the iPhone comes the closest to integrating the entire wireless interface – including all the supporting [RF] modules-on a single chip. This further enhances the iPhone 4’s space efficiency and serves as yet another testament to the advanced state of Apple’s design.”
The iPhone 4’s housing, which manages to be 24 percent smaller than its predecessor, while accommodating a much larger battery, also culled praised.
“The metal housing of the outer enclosure serves as a physical antenna, a tough task to design and manufacture because antennae pieces have to be insulated from other parts, and yet be rigid around the perimeter,” Keller said. “This adds more complexity and cost, but elegantly uses every possible cubic millimeter of the iPhone for function, and not just form. The tight intertwining of form and function is an area where Apple has always excelled.”
Relative bargains on iSuppli’s detailed BOM for the iPhone, appeared to be the smartphone’s much-discussed gyroscope, at $2.60, its accelerometer, at $0.65 and its GPS connectivity, at just $1.75.