What? Apple does almost no R&D at all compared to its competitors:

Apple’s R&D spending low compare to overall revenues
http://www.macsimumnews.com/index.php/archive/apples_rd_spending_low_compare_to_overall_revenues/

It is essentially a company raping the shit out of increasingly demented punters with a tiny number of highly profitable consumerist toys created on the cheap and then sold with 'reassuringly high prices' for the sake of image and branding.

Demographics tell us iPhone buyers are almost exclusively small boys in the 18-44 age bracket for whom gadgets have become the male equivalent of a new pair of shoes in the sales - you don't know why you want them, you just know you have an urge to buy them. Two weeks later you realise you hardly wear them and that once again you've squandered money on something you can't really afford.

I'm never surprised that so many must-buy-Apple zombies here can't see what's actually going on here, i.e. that you're all buying into a brand rather than anything of real value. It is of little consequence to the rest of us, save the fact you're all so easy to troll.

What a pointless waste of time writing the article. Every business makes profit, Apple's iPhone will be pretty low on the list compared to other products when it comes to mark-up (clothes, windows etc). Just STUPID STUPID STUPID.

Windows costs nothing to manufacture, remember that when you write your cheque. Duh! Your article also had no parts so it might explain why it's worth nothing.

Commentors are once again wrong.

As John C Dvorak suggests, Apple has most likely outsourced all engineering and design to China (Foxcom), except for Jobs (who decides how it will look) and 10-20 programmers that tweak the GUI on Jobs' orders.

If the microprocessor (hardware and microcode) can be SOLD for U$11, I doubt the software and "R&D" cost of the whole phone exceeds another $11 (per unit). Unless you're going to tell me that the "brilliant" software and design of the Iphone is an order of magnitude more complicated than a microprocessor. I highly doubt that's the case.

Ten minutes of using the thing would show that glass on both sides is a disaster waiting to happen, the steel band causes total reception blackouts and the software has largely been already developed. We're on the fourth generation of this OS now, the changes are quite big in some ways but nowhere near as big as building the OS from scratch.

Idiots such as Anonymous- "AT&T "heavily" subsidizes(spell check much?)?" made my day, everyday.

Silly US citizens really think `their` spelling is the right one and the world actually revolves around `their` country, economy, et cetera ad nauseam.

Hahaha. Poor sods.

How much on R&D? They spent $278 million on just one of the two chip design companies they bought in the last 2 years, so, you know, quite a lot. At this markup, they have to sell 900,000 iPhones just to cover that one investment.

No idea why you think the component companies paid for Apple's R&D, that's just gibberish.

No, you're right, I'm sure developing an operating system and a hardware platform only costs a couple hundred bucks.

Who cares? Apple can charge whatever they want for their product. They're not here to sell products at cost; they're here to make a profit. Whether or not people think it's worth the price they pay is up to them.

To be honest, I was surprised it cost them that much in parts at all. I figured they cost even less to build than that.

The Nexus One is a little over $10 cheaper on the parts list according to the same source, but sells unlocked for about the same price as an iPhone.

There is nothing at all unusual about this level of markup between component cost and RRP. As a rule of thumb engineers normally assume a factor of 3 between the two.

"Is it criminal that they want to make a few shillings for themselfs after all the hard work, if I was making a product the whole world wants I wound expect to be rich from it after too."

It's not just "a few shillings" -- and those doing the *hard* work are Chinese (probably even most of the engineers); can the laborers expect to get rich from their work?

"The actual price margin gets obscured by the fact that AT&T heavily subsidises the phone in the US for about what it costs to manufacture. AT&T makes its money back with lucrative data contracts, so it is happy."

AT&T "heavily" subsidizes(spell check much?)? If it was heavily subsidized, the phone would be free, for what they're charging per month for voice and data.

I'm an Android fanboy, but this article is ridiculous. With the exception of the antenna issues, the new iphone packs some nice hardware and although I prefer the Android OS to iOS, the iOS is still a smooth UI that more than meets the needs of many people (obviously, look at the sales numbers).

People need to have some perspective here. No one is disputing the fact that there are R & D as well as other associated costs. The point is that with the margin made on the hardware, Apple is making ridiculous profit. A little math: ~$500 sale price per Iphone 4 unit - ~$187.00 hardware costs = $313.00 gross profit per unit. Apple moved 1.7 million units of these in the first few days, which is ~$626 million dollars gross profit. I'm no expert, but I'm guessing their miscellaneous costs developing this were somewhat short of that figure. If so, they are no clearing the full $313.00 profit for every unit they sell for the rest of the product cycle. That's net profit in the billions of dollars, for a phone that has to be held in a specific way to even get reception. Why isn't anyone complaining? We sure as hell complain about the 3-5% margin oil companies make on gas sales.

Even if Apple doesn't pay for the manufacturing and assembly of the phone, a parts list is still a parts list. They still had to figure out how to make all that stuff fit into the iphone shell. R&D isn't free. Although, whoever designed the antenna or tested it, should probably not be getting a bonus this year.

I'd like to see the parts list for other phones (Nexus One, Evo, Droid) to see how they compare.

The *components* cost $187.51. Are you deliberately trying to be more like the Register these days?

So how much does design and R&D cost then steeroy?

taking the figures here, then very very well, cos its not like the price of the components being used dont include these same costs as well do they?

So if I give you $187 you can go build me one and save my money! lol

get real, what a stupid article, ok AT&T might pay for it to be buit but how many millions went into design and research! then after support and things like that

they pump money at products like this and thats why its 1000% better than anything else on the market.

Is it criminal that they want to make a few shillings for themselfs after all the hard work, if I was making a product the whole world wants I wound expect to be rich from it after too.

So the price of software (with updates) can be calculated at the price of a blank CD and a jewell case? Or is this model only applied to manufacturers that we wish to pillory for the click revenue?

Because Apple don't pay their designers and software engineers, or do any R&D.