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Published: Wednesday, 6/25/2008

Manufacturing cost of iPhone put at $173

NEW YORK The cheapest model of Apple Inc. s new iPhone, which is about to go on sale for $199 in the United States, costs about $173 to make, according to an estimate by research firm iSuppli Corp.

The phone, which updates last year s model with faster Internet speeds and an improved navigation feature, goes on sale on July 11.

Apple s profit is much more than the $26 difference between the cost and retail price. The retail price is subsidized by the exclusive carrier, AT&T Inc. which, in effect, will be buying the phones from Apple at a higher price, then selling them at a loss that it earns back through monthly service fees.

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