iPhone 5 costs $199 to make, say analysts

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8 hrs.

Wilson Rothman

Every time an Apple product comes out, a select few reviewers get first dibs on testing it first. On Tuesday night, the iPhone 5 reviews wen... Read more

1 hr.

Devin Coldewey

Early estimates by hardware analysts put the cost of building?the iPhone 5 with 16 GB?at around $200 ? more expensive than the 4S was at launch but not surprisingly so. The improved screen and wireless chip are tipped as major costs.

The device isn't even shipping yet, but companies like IHS iSuppli can still put together an estimate by looking at published specs and talking with manufacturers. Until the actual phone gets dissected and the parts identified and priced, it's just speculation, but a ballpark estimate is still useful. An earlier analysis by UBM TechInsights put the cost at $167.50, however, so both should perhaps be taken with a grain of salt.

The most expensive single item in the iPhone 5's bill of materials is the screen, according to iSuppli; by integrating the touch panel and increasing the size to 4 inches (from 3.5 inches), the cost for that one component jumps to an estimated $44. The new LTE-capable wireless chip is the next-most-expensive piece, costing around $34, significantly more than the 4S's more limited chipset.

Not all the components are more expensive, though. The flash memory used to store all your music and apps has gotten cheaper over the last year, meaning 16GB of it now cost as little as $10, compared with $17 last year and even higher the year before.

The $199 total is exactly the price at which the 16GB version of the device is being offered, at least with a two-year?contract. With no contract, the price balloons to $649, more than three times the estimated cost to build it. It's a relatively high markup: Google's Nexus 7 tablet, for instance, is estimated to cost $152 to build, and it sells for $199 with no contract.

These cost analyses help the industry understand how much profit is being made per phone, and teardowns show who actually makes the components in question (for example, Sony made the iPhone 4S's camera).?Expect a full breakdown of parts and costs when the device actually?ships.

Devin Coldewey is a contributing writer for NBC News Digital. His personal website is coldewey.cc.

Source: http://www.nbcnews.com/technology/gadgetbox/iphone-5-costs-199-make-say-analysts-1B5988132

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