Verizon iPhone 4 Costs $171.35 To Manufacture; 9% Less Than GSM iPhone 4
iSuppli reports that Apple has managed to reduce the bill of materials (BOM) cost of the CDMA iPhone 4 compared to the GSM version. While the GSM iPhone 4 costs Apple $187.51 to manufacture, the CDMA iPhone carries a BOM of $171.35, which is a good 9% less than the GSM iPhone 4.
If we are to include the manufacturing expenses as well, the production cost rises to $178.45. iSuppli writes:
â€œDespite having nearly the same functionality and a similar bill of materials (BOM) as the previous model, the new code division multiple access (CDMA) version of the iPhone 4 carried by Verizon Wireless includes significant changes in its design and component selectionâ€.
Apple has changed quite a few things in the CDMA iPhone. This includes the tweaked antenna design to support CDMA network, integrated GPS functionality and a shrinked Wi-Fi/Bluetooth combo module. The most significant change in the CDMA iPhone 4 is the redesign of the antenna system. Unlike on the GSM iPhone, in which the GPS, Bluetooth and wireless local area network were integrated in one segment of the antenna, the CDMA iPhone gets a separate Bluetooth/WLAN antenna.
According to a senior analyst at iSuppli:
â€œApple has decided to isolate the Bluetooth/WLAN antenna from the enclosure/antenna assembly. This design change leaves the top enclosure antenna segment to serve primarily as the GPS antenna and probably also as CDMA diversity receive antenna. The use of antenna diversity is significant because this scheme improves signal reception performance.â€
Apart from these, the CDMA iPhone 4 uses Qualcommâ€™s MDM6600 baseband/RF transceiver, which integrates GPS control circuitry. This was not the case with the GSM iPhone, which uses a separate Broadcom BCM4750 chip to do the same thing. The rest of the components on the CDMA iPhone more or less remain the same. Apple has also used newer, cheaper materials in other parts of the device to bring the overall production cost down.
Note that the BOM cost of $171.35 accounts only for hardware costs and does not take into consideration other expenses such as labor, shipping, advertising, software development or patent licensing etc.Â So the overall costs are expected to be much higher.
Nevertheless, the teardown analysis provides an interesting perspective on the estimated profit margins that Apple stands to make from the sale of iPhone 4 and how it continues to reduce the cost of manufacturing an iPhone. What are your thoughts?