The iPhone 3G (at least pretends) to be cheaper to buy because it's cheaper to make

With its new bells and whistles, namely its 3G and GPS chips, you might think the iPhone 3G would be more expensive to manufacture than the original iPhone. Not so. It’s actually just a little more than half as expensive to produce, according to a report in the EETimes based on a breakdown of the device’s components.

The reason? Touchscreen assembly and other improvements in the device’s engineering more than offset the relatively minor cost bumps for the new components.

Still, Apple’s gross profit on each unit sold will be substantially less. Whereas the first device brought in around $229 per unit sold, the iPhone 3G may only bring in around $99. The hope is that an increased volume of sales along with any subsidies AT&T and other worldwide carriers are paying Apple will make up the difference, according to MacNN.

The $299 16 gigabyte version of the iPhone 3G will be a more significant money maker for the company. Even though the device is $100 more than its 8 gigabyte counterpart, that memory upgrade will only cost Apple about $20.

There has been quite a bit of debate as to whether the iPhone 3G is actually cheaper for consumers at all, despite its $200 price cut. Because AT&T is charging $10 a month more for the 3G data plan, over the 2-year contract of the device, consumers will end up paying more out of pocket than they would with the current generation iPhone, even though the product alone is more expensive.

But as we’ve discussed before, that’s really one of the oldest tricks in the mobile book — and the real shock is that AT&T didn’t subsidize the phone when it first came out last year at $599, even after you signed a 2-year contract.

I still contend that the true rip-off is the text-messaging plan for the device.

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