The real price of an iPhone? Around $950

Apple and Orange (funny) have released their pricing for iPhones without plans today. The costs, according to France24 breaks down as follows:

• 399€ if you get a 2 year plan with Orange
• 649€ "Locked" to Orange but sans contract
• 749€ Unlocked and able to use on any provider

The real price of an iPhone can probably be gleaned from the last two figures unless they have been artificially manipulated by French Law.

649€ or $980 (man is the US Dollar in the crapper!) is probably close to cost for Orange. At this price, Orange is getting or keeping a customer for at least 6 months. It can therefore afford to forfeit any profits and some sales, marketing and operating costs knowing that it will recoup them from monthly data and mobile minutes.

It stands to make a healthy profit of €100/device on iPhones it sells to customers on other carriers. While €749 or slightly over $1100 may seem like a lot of money (and be the REAL RETAIL price of the iPhone), it is much lower than the astounding price that T-Mobile is charging Germans. Expect some movement on this soon - as Germans will otherwise just head to France to buy unlocked iPhones.

Market Intelligence vendor, iSuppli put the cost of components and manufacturing of the iPhone at under a paltry $300. Of course this figure doesn't take into consideration all of the hardware R&D, marketing, company overhead and many other factors that it takes to put this device on store shelves.

In particular, the R&D for the iPhone is probably much higher than any other device Apple has ever sold. Why?

1. They developed what is esentially a new OS, almost from scratch, that runs on new-to-Apple ARM processors....no cakewalk. Wait, didn't Newton use ARM?
2. Many new cutting edge applications that work on this platform had to be developed from scratch.
3. Apple has no experience in the mobile carrier market. We are talking GSM components, wireless modems, visual voicemail, etc. - and then integrating them on the platform.
4. iPhone is cutting-edge hardware. Glass, amazing tocuhscreen, long battery-life, etc.

This wasn't a cheap device to bring to market. And the iPod Touch, to compete with other video/music players out there, isn't absorbing many of these development costs (also the reason it is missing some of the iPhone applications). Therefore, Apple needs to recoup these costs on 10 million iPhones over a year an a half and still walk away with their typical 30+% margins.

So, give or take a few bucks, you can consider the iPhone costs about 1/3 parts, 1/3 R&D and 1/3 Apple Gravy. Not a bad recipe for another Apple success.