Report: G1 costs 10 percent less to make than iPhone

If the G1 costs less to make than Apple's iPhone, why is it twice as expensive to purchase?

Update: 4 p.m. Wednesday: Let's get this G1 cost thing straight, shall we? Writer Matt Hickey clarifies some of the points he made in the post below and thanks readers for their feedback. This post was also altered to reflect the correct retail price for the G1.

Corinne Schulze/CNET Networks

When it comes to the next-gen phone wars, two handsets immediately come to mind: Apple's iPhone and the G1 from HTC and T-Mobile, the first commercially available phone to run Google's Android OS.

The G1 retails to new customers for $179, while the basic-model iPhone goes for for $199. Despite those numbers, DowJones, CNN, and iSuppli have discovered, via a virtual teardown, that the G1 is actually 10 percent cheaper per unit to manufacture than Apple's offering, something smug iPhone users are sure to love.

It costs HTC $144 to make a single G1, whereas the iPhone costs $160 each. What's not explained is why the G1 sells for twice the cost of the popular iPhone. It could be the 3-megapixel camera or hardware keypad, but the general lack of internal memory (the G1 has 1GB removable, the iPhone has 16GB internal) counters that. Keep in mind that the costs mentioned previously don't factor in things like marketing and R&D.

While this information probably won't change anybody's buying decision, it's still interesting to see exactly how much of your purchase is subsidized by the carrier and how much is just pure profit.

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