AT&T Continues Subsidizing New iPhone

Written by Dan Jones

Wednesday, June 24. 2009 at 04:50 PM EDT Post a comment

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The least expensive new iPhone 3G S costs $179 to build and $199 to buy with a two-year contract from AT&T Inc. (NYSE: T), which means that the carrier is continuing to subsidize this year's model in anticipation of increased data revenues over the long term.

The bill-of-materials (BOM) cost estimate comes from the analysts at iSuppli. "The entry-level, 16Gbyte version of Apple’s new iPhone 3G S carries a BOM cost of $172.46 and a manufacturing expense of $6.50, for a total of $178.96," according to Andrew Rassweiler, director and principal analyst for teardown services at iSuppli. (See Apple's 3G S Draws Decent Crowds.)

This is actually slightly higher than the $174.33 that the analysts estimate it cost Apple to build the original 8GB 3G iPhone in July 2008. The introductory price for both the old and new 3G phones is $199. iSuppli estimated that AT&T bought each original 3G model from Apple for $499 and thus was heavily subsidizing and continues to heavily subsidize the iconic smartphone. (See Apple Peels Away iPhone Costs and AT&T’s iPhone Pain.)

To continue reading, see the full story on Unstrung.com.