“With the base model carrying a $199.00 BOM, the iPhone 5’s components are expected to be slightly more expensive compared to the iPhone 4S model,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. “The low-end iPhone 4S with the same memory density as the base-model iPhone 5 carried a BOM of $188.00, according to a preliminary estimate issued by IHS in October 2011. While the price of some components, such as NAND flash, has fallen during the past year, the iPhone 5’s overall BOM has increased mainly because its display and wireless subsystems are more expensive compared to the iPhone 4S.”
iSuppli gave the iPhone 4S a $188 BOM last year, but improved wireless, additional RAM, larger in-cell display and a better processor upped costs ahead of falling storage prices and other things that carried over from last year’s model.
A bill of material costs is an estimate at best, and no one is sure at what prices Apple gets components. The idea is to estimate the cost of the next iPhone (n+1) produced after all the constants are considered, such as: ads, marketing, R&D, packaging, shipping, overhead, etc.