iPhone component price dropped $54

The amount it costs Apple to make the iPhone has dropped since it was released, but not by the $200 they just cut from the retail price.

It costs less to make an iPhone now than when Apple showed it off in January, but not enough to cover yesterday's price cut.

The Cupertino, Calif.-based company yesterday cut the price of the 8GB iPhone from $599 to $399 and sent the 4GB version to the vet. The company initially stated that price cuts are par for the course in the technology world.

Price cuts are common, but they are usually fueled by declining component costs over time. It's tough to square the $200 price whack with anything that happened in the component world.

Andrew Rassweiler, principal teardown analyst at iSuppli, said that the manufacturing and component costs for the 8GB iPhone model came to $226.61 in July, while the 4GB model cost $24 less.

In January, the firm estimated that the parts and manufacturing of the 8GB model cost $280.83.

Thus, the iPhone does cost less to manufacture now than it did in six months earlier in January, but only by $54.22.

That leaves nearly $150 that's tough to explain away by that-sort-of-thing-happens. Component prices have gone down a bit in the eight weeks the iPhone has been out, but not that much. Think about it for a second: the component and manufacturing bill would have had to drop to $26 to suck up the cuts without impacting margins. The horrendous price cuts in the flash memory market actually slowed down during the summer.

The iSuppli figures do not include intellectual property, marketing, or R&D. But these factors typically don't impact price like component costs. These costs are amortized in a controlled fashion.

 

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