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Analysis: Hardware takes nearly half the iPhone's cost

Posted: 04 Jul 2007 ?? ?Print Version ?Bookmark and Share

Keywords:iPhone? hardware component? assembly costs? SDRAM memory?

The much-anticipated launch of the iPhone confirmed that the Apple mobile phone could be one of the most expensive and densely packed smart phones on the market. iPhone's hardware components alone are estimated to cost the company $220, about $40 more than the next most costly smart phone, according to analysts at Portelligent, who tore apart a system over the weekend.

"It's a pricey piece of hardware. The $220 bill of materials is definitely at the high end of smart phones today," said David Carey, president of Portelligent, a teardown service focused on mobile phones and other consumer products.

Low margins
While the iPhone's costs are high, its profits will apparently not be as great as those of some of its competitors. Portelligent estimates typical smart phones component costs range from $130-$180 and some of the handsets sell at or even above the iPhone's $500-$600 price tags.

The iPhone's touch-sensitive 480-by-320 display is one of its most pricey parts at about $60. Memory is also a big expense. Many smart phones come with about 128Mbytes of flash and a slot for users to add 2Gbyte flash cards as needed. The iPhone comes in models with 4Gbytes or 8Gbytes flash built in and no external memory slot.

About 700Mbytes of the iPhone's flash is reserved for Apple's OS and applications. The phone's applications processor has an additional 128Mbytes of SDRAM memory dedicated to CPU working space.

The $220 cost does not include Apple's no doubt huge software development effort to port its operating system and develop applications and other code needed for the handset.

'Sophistication and complexity'
Opening up the simple-looking handset, Carey said he found "an extraordinary level of sophistication and complexity" in its mechanical design." He called the contrast an example of Apple's "outside in" philosophy of creating feature-rich products that look simple but involve significant internal complexity.

In its effort to pack the features of a phone, iPod and mobile Web browser into a small and sleek case, Apple drove an unusually high degree of mechanical complexity, forcing greater assembly costs. Carey estimated the iPhone has a density of about 1.91g per cubic centimeter, compared to rivals at about 1.14. "There isn't much unused space in this design," Carey noted.

For example, the device uses more than 20 screws to attach three separate circuit boards to the case, compared to about four screws in many handsets. To maintain a sleek look, some seams are glued shut.

Unlike competing handsets, the iPhone offers users no access to the battery or other internals. The access doors can eat up 0.5-1mm of space, Carey said. In addition, unneeded connectors were removed, saving more room. The battery for example, has wiring soldered into place.

"This wasn't designed to be easy to repair, and it's definitely more expensive to get assembled," Carey said.

- Rick Merritt
EE Times

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