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Apple's $199 iPhone: How can it be so cheap?

Yardena Arar | June 8, 2008
How could Apple's 3G iPhone with more memory, more radios (3G/GPS technology), and better battery life go for, essentially, a third of what the original cost a year ago?

This business model would not have been possible a year ago, he notes. "When the iPhone was launched, it was with one operator in one country. Now it's launching in 22 countries as a 3G phone, going to 70 countries by the end of the year."

"They also have that thing called the apps store," notes Mike McGuire, research VP at Gartner. Apple CEO Steve Jobs has said developers of iPhone apps will retain 70 percent of sales revenue, which leaves 30 percent "for someone else," McGuire said.

"It's not just a hardware sale anymore--it's an ecosystem," McGuire added. "They're not just making money on the hardware."

 

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