Analysts: iPhone 3G S materials cost only 2% more than 3G

Apple's new iPhone 3GS proved to be a hit last weekend, according to Apple, selling over a million units in its first weekend; and if hardware analysis firm iSuppli's latest analysis is accurate, the 3G S costs 28% less to make than the first generation iPhone did two years ago, and only about 2% more than the iPhone 3G last year.

ISuppli delivers reliable bill of materials reports for consumer electronics products, in which it tears down a device, adds up the cost of each of its components and then estimates the manufacturer's total expense in making the device.

The firm attributes the marginal cost increase to the limited changes to the platform. "From a component and design perspective, there's...a great deal of similarity between the 3G and the 3G S. By leveraging this commonality to optimize materials costs, and taking advantage of price erosion in the electronic component marketplace, Apple can provide a higher-performing product with more memory and features at only a slightly higher materials and manufacturing cost," said iSuppli Teardown Services' Director and Principal Analyst Andrew Rassweiler.

In the iPhone 3G, for example, there are two radios for Wi-Fi and Bluetooth, each made by a different company (Marvell and CSR). The 3GS uses a single Broadcom solution for Bluetooth/FM/802.11. The compass features exclusive to the 3GS add chips from AKM Semiconductor and an additional STMicroelectronics accelerometer. After manufacturing costs, iSuppli estimates the 16 GB iPhone 3 GS costs $178.96.

iSuppli teardowns over the years