Apple’s “generous” move to fix the iPhone 4 antennae issue will cost the company $175 million dollars the company announced during their earnings conference call yesterday. Apple will expense the cost of the cases as deferred revenue in their 4th quarter balance sheet.
What is not clear is how Apple arrived at this figure. Assuming that Apple will sell approximately 6 million iPhones by September 30th, 2010 (which is the final day anyone can purchase an iPhone 4 and get a free case for), the cost of it case to Apple will be $29.16. Considering that the case sells at the store for $29.95, something does not add up. The estimated production cost of the bumper case (and cases similar to it) is anywhere between one to two dollars per case. Considering the minimalistic approach to product packaging and shipping, the cost of the case will top out at three dollars. So where is the rest of the $26.16 being used?
Although Apple has not released exact figures, one could deduce that Apple will incur additional costs such as Marketing, Infrastructure (web site and store infrastructure to process the free case orders), Personnel, and the cost of third party cases that will have to be sourced since Apple has already said that they will not be able to make that many bumper cases. What is also not known is whether or not Apple is including the estimate cost of returned iPhones in this figure as well.
Any which way Apple looks at it, it is definitely cheaper than the estimate of $1.5 billion that a complete recall would have cost Apple. It is clear that Apple wants to put this issue behind them.
Will you order a bumper case from Apple? Are you planning on returning your phone? Let us know your thoughts in the comments section below.