3G iPhone is still profitable at $199

When people first saw the price of the new iPhone they thought, “Wow, how can Apple do that”?

Well, ISuppli estimates the new iPhone will be cheaper to manufacture then the first one (I knew that had to be it). The original iPhone had an estimated manufacturing cost of $265, but since component prices went down the new iPhone cost about $173 to make. Also, Apple will still get the $300 kickback from carriers (ATT in the US) that offer the iPhone. And if you figure in the cash they’re going to make on the new Application Store, its easy to see why this is going to be a big money maker.

ISuppli will do this again once the new iPhone ships, so it can report figures that include all the other costs associated with the iPhone (i.e. software dev, shipping, and packaging). Once that time comes, we will know to the penny how much money Apple stands to make.