Apple spending $203 for each iPhone 4S, says report

Preliminary estimates from UBM TechInsights say that Apple is paying $203 to manufacture each 32GB iPhone 4S, with $26 spent on the processor and $31 for the Retina display.

The new iPhone 4S
The new iPhone 4S Apple

Apple is shelling out about $200 to make each 32GB iPhone 4S, which the company will ultimately sell for $749, not counting the carrier subsidy.

At least that's the initial estimate from research firm UBM TechInsights.

Analyzing the overall cost history and the breakdown of each major component, UBM has calcuated a manufacturing cost of $203 for each 32GB model of the new phone. That's about the same range as Apple paid to make the iPhone 4 last year, giving the company around the same profit margin. This preliminary projection includes expenses of $26 for the new A5 processor and $31 for the Retina display.

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Of course, customers who sign up for a new two-year plan end up paying much less than Apple's price tag, thanks to the subsidy kicked in by the carriers.

Apple will sell its new 16GB, 32GB, and 64GB iPhone 4S models for $649, $749, and $849, respectively, according to CNET sister site ZDNet. Those are the prices subscribers not eligible for a new phone would have to pony up. But people who are able to start new contracts or renew their existing ones will pay $199, $299, and $399 for each respective iPhone 4S model.

Commenting further on the new phone, UBM called the iPhone 4S a "moderate improvement" over the iPhone 4 but nothing revolutionary, with the new A5 processor, a new camera, better battery life, and support for both CDMA and GSM networks. But the evolutionary step taken by the latest iPhone is "par for the course for Apple," according to the research firm.

"Just as we saw a modest technology bump from the iPhone 3G to the iPhone 3GS, Apple is adopting the same model of iterative improvement and incrementalism as they gear up for the iPhone 5 platform," UBM TechInsights Vice-President of Technical Intelligence David Carey said in a statement. "By continuing down the hardware evolution path, more powerful and useful software such as natural voice-recognition, highly-rendered gameplay, wireless video mirroring, and complex image processing all become possible. The software experience--enabled by 'good-enough' hardware--is arguably what customers care about most in the end."

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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