iPhone 3G geared for profit, not cutting-edge tech

Despite the iPhone 3G's more modern wireless communication standards, arguably thinner design, and inclusion of GPS, its overall cost of manufacture has dropped just over $50, according to iSuppli. The company's Teardown Analysis Service reveals that the device is geared towards cutting costs, while increasing worldwide presence, rather than simply filling the iPhone with the latest and greatest. The iPhone 3G is assessed at $174.33, almost exactly the predicted $173 issued in June.

"The addition of 3G wireless capability represents an evolutionary design step for the iPhone, not a revolutionary one," said Andrew Rassweiler, teardown services manager and principal analyst at iSuppli. "iSuppli believes Apple aimed for a more cost-effective design for the 3G iPhone compared to the 2G, in order to lower the retail price�which will allow the company to seed adoption and to capture maximum market share now�while the company still has buzz and a perceived differentiation relative to its competitors."

iSuppli confirms that an Infineon AG chipset does power the unit, with Samsung, Marvell, and Cambridge also putting major components into the iPhone 3G. Cost and quality were optimized as Apple elected to use once circuit board for the phone, over the two that were previously in the device, while also making use of a 10-layer board.

All things considered, iSuppli finds that overall, based on the selling price of the 8GB model, Apple stands to reap a margin of approximately 55-percent.