Two weeks ago, Apple CEO Steve Jobs announced the much-anticipated iPhone 3G. Now iSuppli is sharing how much it costs Apple to build the mobile device — and the company’s profit.

Apple’s second-generation iPhone will have an initial hardware and manufacturing cost of $173, according to a preliminary “virtual teardown” by iSuppli. The new iPhone 3G goes on sale July 11.

“At a hardware bill of materials and manufacturing cost of $173, the new iPhone is significantly less expensive to produce than the first-generation product, despite major improvements in the product’s functionality and strange usability due to the addition of 3G communications,” said Dr. Jagdish Rebello, director and principal analyst for iSuppli.

The Virtual Teardown

In advance of the iPhone’s release, iSuppli used insights from its analysis staff to develop estimates of iPhone substance, suppliers and costs.

The original 8GB iPhone cost $226 after component price reductions, Rebello explained. That figure doesn’t include other costs like software

development, shipping and distribution, packaging and miscellaneous accessories included with each phone.

“The original 2G phone was sold at an unsubsidized price of $499,” Rebello noted. “However, at a retail price of $199 for the low-end 8GB version of the new 3G model, wireless communications service carriers will be selling the product at a subsidized rate, using a common business model for the mobile-handset market.”

A New Business Model

The subsidy the wireless carriers pay to Apple will be about $300 per iPhone, iSuppli estimates. That means that with subsidies from carriers, Apple will be selling the 8GB version to carriers at an effective price of about $499 per unit, the same as the original product, iSuppli said.

For the first version of the iPhone, Apple received a portion of the wireless carriers’ revenue from service subscriptions. With the second-generation version, Apple will not receive service revenue, making a profit…

Orginal post by Top Tech News