iPhone 4S costs $196 to make. AT&T already sold 1 million units

AT&T has announced that it has already activated more than 1 million iPhone 4S devices on its network as of Tuesday. Since the iPhone 4S only went on sale last Friday, that means that AT&T has sold a million units in just five days. An average of 200,000 per day, which makes this the most successful iPhone launch in AT&T’s history. That’s right, even more so than the release of the original iPhone in 2007. So despite being criticized at launch for being too evolutionary and not revolutionary enough, the new iPhone keeps breaking record after record.

If you were curious to find out just how much the iPhone 4S costs to make, we’ve now got the answer for you. And it may shock those of you who’ve bought one unlocked (or are planning to). See, the 16 GB iPhone 4S carries a bill of materials (BOM) of $188. Add to that the manufacturing cost per unit of $8, and you reach the conclusion that Apple’s newest smartphone costs just $196 to make.

If you bought one on contract for $199.99, you’ll think that’s a lot. But it isn’t. Your carrier paid Apple more than $600 for the device it sold you for $200. The difference is called a subsidy, and it’s the reason you had to sign a two-year contract. Your carrier will get that difference back (and then some!) from your monthly bills.

The 32 GB iPhone 4S costs $215 to make, and the 64 GB version costs $254. The price differences are obviously because increased capacity flash drives cost more.

What’s funny is that Microsoft hopes that Windows Phones will cost less than $200 to make… sometime next year. And undoubtedly with hardware that will be inferior to the iPhone 4S. That speaks volumes about Apple’s supply chain prowess, but also about the fact that the iPhone 4S indeed doesn’t have any revolutionary new hardware in it. In fact, the ‘freshest’ component inside, the processor, was first seen in the iPad 2, so even that is a few months old at this point. The older the hardware, the cheaper it is – so it makes perfect sense that the iPhone 4S is that cheap to make.

And if you’re wondering where the difference between the $196 that it costs Apple to make the iPhone and the $600+ that carriers pay for it goes, look no further than Apple’s pockets.

Via iSuppli and AT&T

Author: Vlad Bobleanta

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  • http://perfectradianceserum.net/ Perfect Radiance

    When I read the title, I thought, WOW, AT&T must be making huge bucks out of it! But, now it looks like Apple is the one whose making huuuge bucks out of this 🙂

  • Anonymous

    I protest against corporate greed. I have no job. I have a hard time paying my bills, and I bought the newest iPhone 4S that Apple has a 66% profit margin on. I may be mentally handicapped. I am the 99%. Occupyapplestores.org