Does that include shipping, packaging, marketing, design, research, legal, office space, utilities, software and all the rest?

Didn't think so.

"The gyroscope chip, for example, apparently costs Apple $2.60 while it costs $2.90 in quantities of 200,000. These disparities pop up in a number of places, which, sadly, lends an air of WTF to the proceedings."

I'm not sure I understand this last statement. Should Apple not be getting a higher volume discount? I assume they're buying over 200,000 single parts.

The actual article: http://www.businessweek.com/technology/content/jun2010/tc201...

It doesn't cost $188 to make; it costs $188 for a buckets of parts :)

the 32GB iPhone 3GS used to retail in Australia for around US$850 ex tax. Assuming Apple's usual margin of 20-30% (let's say 30), and allowing another $50/unit for support/warranty issues, that puts the cost at something like $560 each.

Keep in mind that iSuppli's reports have been described (by daringfireball, as well as others: http://daringfireball.net/2007/07/isuppli) as "bullshit". A lot of their price numbers (especially the ones for unusual parts, like the CPU and LCD in the iPhone 4) are pretty much pulled out of thin air.

As another commenter noted, design, innovation, packaging, marketing, employees and obviously profit/taxes... aren't counted here.

But yes, the iPhone is pricey if I compare it to other devices. For example, Google Nexus One have a better resolution, memory and processor that the 3GS, but the 3GS is more expensive.

I don't bother paying $1K or more on a phone, but at least this phone comes with cutting edge technology from the inside (speedy processor, large memory, Open OS...) and the outside (High resolution screen and Camera, amazing design...)

Bill of Materials is not equal to cost but it wouldn't be a Techcrunch headline otherwise.

Windows 7 costs $1.20 to make. 20 cent dvd + 20 cent packaging + 80 cent booklet (or whatever is in there.)

A high end CPU costs below $3 in material costs. (Numbers purely guessed)

Given these examples I find it wrong to accuse Apple for selling the iPhone at that price point. At least to me these "Product X costs Y USD in production" articles sound a bit accusing.

This seems low, even compared with Apple's usual high margins. Do they bump up the standalone price to make the contract prices look better?

On the other hand it explains the iPod Touch prices which have always seemed cheap by comparison.

Software has no value? Crap, I need a new career.

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If only I could get one at that price :( stuck with LG