SAN JOSE, Calif. – Apple's version of the iPhone4 for the Verizon network might cost as much as $30 less to make than the original model, according to one analyst firm.
"A combination of falling component prices and potentially a bit of simplification to the radio means our original $200 iPhone4/32GB hardware BOM cost might be closer to $175 for Verizon's version of the product," said David Carey, a vice president at UBM TechInsights, a sister division of UBM Electronics, the publisher of EE Times.
Carey cautioned that he has not had a chance to see or teardown the Verizon iPhone4 yet. "These are of course early estimates and we'll have a better idea of the specific costs and cost impact once hardware is released," he said.
Carey assumed Apple would experience no cost increase for using existing CDMA silicon, likely from Qualcomm. "A price increase is feasible if we’re looking at a reworked universal CDMA+UMTS design--technically possible with the right Qualcomm chipset," said Jeffrey Brown, another vice president at UBM TechInsights.
It's likely Qualcomm supplies the CDMA device whatever Apple used.
"Via Technologies has begun trial production of a CDMA2000 EV-DO chip but their volume of shipments at this stage has to be considered very small in comparison to Qualcomm," Brown said.
"In our opinion, it would be very rare to see Apple design their flagship product for a new service provider with a relatively unproven chip supplier and their components," Brown said. "We also believe that Apple would have the leverage to negotiate aggressively on IC cost since Qualcomm surely has to be enthusiastic about getting designed into what should surely be another Apple success story," he added.
"Under the assumption that it is strictly a dual-band CDMA phone there should be some savings on the RF front end, with the original QB GSM + QB WCDMA now going to DB CDMA with accordingly fewer power amps and other components," said Carey.
"The Tx/Rx/Mode switch and the four PA-internal W-CDMA duplexers should now be gone, replaced here by just a pair of duplexers and a lower-cost band-splitter for 850/1900MHz," Carey said. "If we assume these changes and a cost parity on the baseband and transceiver, we're probably looking at $3-$5 cost reduction in the RF radio section," he added.
Flash prices have also declined since the original iPhone4 launched in July.
"In the original iPhone 4 report we pegged the 32GB of flash at about $47," Carey said. "Current market pricing might suggest an Apple cost closer to $30-$35 today," he added.
Overall Carey estimated Apple may save $20 total from system memory price declines and RF changes. Total BOM savings could be as high as $30, he said.
The Verizon iPhone4 got an underwhelming reception when it was announced earlier this week. In part, that was because the move had been rumored for more than a year. In addition, many had speculated Apple might release an iPhone5 that would be one of the first handsets to support Verizon's new LTE network, officially launched in December.
However, Apple took a more conservative approach rolling out a CDMA version of its existing iPhone4. Whether Apple moves to LTE with an iPhone5 later this year remains to be seen.
Apple could upgrade the iPhone4 features in its next generation handset. That would let its first U.S. carrier customer—Verizon's archrival AT&T which had an exclusive deal on the iPhone in the U.S.—at least have parity with Verizon.
Apple may wait until both AT&T and Verizon have widely deployed LTE before it rolls out a handset for the network to ensure the handset has the broadest possible market.