Many of us wonder how it’s possible for Apple to sell their new 3G iPhone for $199. Well, according to iSuppli there are two main factors that make this possible. First of all, mobile phone service providers are willing to subsidize these handheld devices by paying Apple up to $300 per unit. Second, Apple has done such a good job choosing components that the 3G iPhone costs them only $173 to make.

Apparently, the most expensive components are the 8GB NAND flash memory and the touch-screen which cost $22.80 and $20.00, respectively. All other components add up to approximately $119 and the labor involved in assembly is about $9 per unit. To put things into perspective, the older version of the iPhone cost around $226 to make and did not have the 3G technology or the GPS capabilities which make this an important achievement for Apple.

A while back an analyst stated that if Apple wanted to sell 10 million units before the end of this year they would have to launch the 3G version of the phone, make it available in a larger number of countries, and bring down the price to around $200. And this is exactly what they are doing. Considering that high-end cell phones from other companies can cost over $500, the 3G iPhone is well on his way to hit this important milestone.