Video: iPhone price cut heats up phone wars

updated 6/24/2009 4:47:56 PM ET 2009-06-24T20:47:56

Research firm iSuppli says Apple Inc.'s latest iPhone costs just a few dollars more to make than the previous model.

That analysis comes despite the new iPhone 3GS having new features like a better camera and video-recording capabilities.

ISuppli said Wednesday that its breakdown of the 3GS indicates the smaller 16-gigabyte model costs $178.96, mostly for parts, including $24 for flash memory. ISuppli estimates manufacturing is $6.50 of that amount.

The new iPhone costs $199 or $299, depending on its storage capacity, when purchased with a new two-year service contract from AT&T Inc.

An earlier teardown by iSuppli estimated that the 8-gigabyte iPhone 3G cost $174.33 to build. At the time, it cost $199 with a new two-year contract. It now costs $99.

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