Some people might be wondering why the new iPhone 3G is going to be so cheap in comparison to the first-gen device. While it’s easy to point out that Apple is likely getting more money from AT&T, rather than relying on actual sales of the device, that’s not the only reason. Analysts suspect that the newer iPhone really only costs around $100 to manufacture.
Portelligent estimates that with this lower manufacturing cost that Apple stands to make around $90 per phone on hardware alone. While that is significantly lower than the estimated $229 profit earned on the original iPhone, the extra money from AT&T that they are likely making in addition to the number of new users that will be attracted by the lower price will no doubt make up for the difference.
According to David Carey, president of Portelligent “Gen2 iPhone pricing is aggressive enough that it made me think Apple’s really taking the gloves off on this one. They are probably not as worried about iPhone hardware profits as they are about getting a piece of the action on service revenues and getting more Macs in homes and offices all around the globe.”
I have to agree with Carey on those points. With such a low price point, it’s going to be hard for other high-end phone manufactures to compete. Not to mention the number of new users that will be introduced to Apple’s products and therefore be tempted to “switch” to a Mac.
[via Macnn]
The iphone 3g actually has a higher cost of ownership than the 1st gen iphone. Over the first two years the phone costs $40 more. And then every year afterward it cost $120 more. I would rather pay the $400 and only $20/month for the life of the phone instead. Just my two sense about the sly move by at&t and apple.
don’t forget there’s not only the number of users “switch”ing to mac, but a lot of developers too. That’ll likely mean more mac apps, which will encourage more mac users which will encourage more developers. Lather, rinse, repeat.