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Briefly: Chinese App Store; Kindle Fire BOM; Motorola stockholders

post #1 of 9
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Apple is now accepting local Chinese bank cards as payment for iTunes App Store purchases. Also, a new analysis claims Amazon's Kindle Fire costs $202 to build. Finally, Motorola Mobility stockholders have approved Google's acquisition of the company.

App Store China

The Cupertino, Calif., company published a support document on Thursday detailing how to set up Chinese bank cards to use Chinese Yuan to pay for its application store. Previously, the Chinese version of the App Store only accepted credit cards that could pay in U.S. dollars.

Unlike the App Store in the U.S., the Chinese App Store allows customers to use their bank cards to top up their accounts in preset amounts. The system resembles common prepayment methods in the country for services such as mobile phone service and public transportation.

Penn Olson reports that the move is also an attempt to curb piracy and "black cards," or temporary iTunes accounts set up using hacked credit card accounts. Apple in the past has struggled to fight fraudulent iTunes accounts in China. In 2009, a number of iTunes gift cards surfaced online after Chinese hackers cracked the iTunes gift card algorithm.

Apple first launched its Chinese Online Store and App Store last October. The company has seen storied growth in the country, which became Apple's second-largest market as of last quarter.



Kindle Fire cost

IHS iSuppli has conducted a teardown analysis of Amazon's Kindle Fire tablet that appears to confirm suspicions that the company is selling the device at a loss, AllThingsD reports. Analyst Andrew Rassweiler oversaw the breakdown, which pegs the Fire's costs at $201.70.

In an effort to achieve aggressive pricing on the tablet, Amazon has cut a few corners to reduce the cost, the report noted. A cheaper wireless chip and the lack of Bluetooth and a camera contribute to these savings.

All the choices have been made here to minimize the hardware cost, Rassweiler said. We expected to see a certain wireless module thats commonly been seen in other tablets, and we were surprised that it wasnt there. There was a cheaper one with fewer features that saved them a few bucks.

A separate teardown of the Kindle Fire earlier this week uncovered the fact that the device is powered by the Texas Instruments OMAP 4430 processor.

Amazon is looking to make back money lost on hardware through content sales, a strategy counter to Apple's own, which is based around breaking even on selling content such as music, videos and applications in order to sell hardware.

According to one analyst, Amazon will lose as much as $50 per Kindle Fire sold. Such losses will, of course, have an effect on the company's bottom line, as it expects to lose as much as $200 million next quarter.



Motorola Mobility

Motorola Mobility stockholders voted to approve Google's $12.5 billion acquisition offer on Thursday at the company's stockholder meeting, with the merger received the overwhelming majority of stockholder's votes.

"We are pleased and gratified by the strong support we have received from our stockholders, with more than 99 percent of the voting shares voting in support of the transaction," said Sanjay Jha, Motorola's chairman and CEO. "We look forward to working with Google to realize the significant value this combination will bring to our stockholders and all the new opportunities it will provide our dedicated employees, customers, and partners."

Google and Motorola announced the merger in August. The deal largely came about as a defensive measure against patent threats to Google's Android mobile operating system, though Google has said that its interest in Motorola was for "more than just patents."

In addition to stockholder approval, Google still needs to gain regulatory approval for the deal. Motorola said on Thursday that, due to the schedule of regulatory filings, the merger is expected to be finalized in early 2012. The companies had previously stated that the deal might go through as early as the end of 2011.
post #2 of 9
China is a huge commercial venture. More and more there are more Chinese people able to purchase electronics products. 1 billion people and take a fraction of that as customer base. The money just pours in.
An Apple man since 1977
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An Apple man since 1977
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post #3 of 9
Quote:
Originally Posted by AppleInsider View Post

According to one analyst, Amazon will lose as much as $50 per Kindle Fire sold. Such losses will, of course, have an effect on the company's bottom line, as it expects to lose as much as $200 million next quarter.

The Microsoft approach, "lets lose profits while attempting to gain marketshare!"

Genius
post #4 of 9
Quote:
Originally Posted by Feynman View Post

The Microsoft approach, "lets lose profits while attempting to gain marketshare!"

Genius

It could be. If the lifetime value of their customers is greater than $50 (+ any carrying charges) they will come out ahead.

I work with many businesses that lose money on the initial transaction, only to gain it back later.

Time will tell whether the people who buy the Kindles are worth the upfront loss.
post #5 of 9
The Kindle Fire is the worse Android tablet yet although it does have Amazon music and books behind it in addition to the low price.

I would not be caught dead with one... but... to each his own.

Time will tell.
post #6 of 9
Quote:
Originally Posted by AppleInsider View Post

IHS iSuppli has conducted a teardown analysis of Amazon's Kindle Fire tablet that appears to confirm suspicions that the company is selling the device at a loss, AllThingsD reports. Analyst Andrew Rassweiler oversaw the breakdown, which pegs the Fire's costs at $201.70.

If that's true, it's a HUGE mistake for Amazon. With BOM at $202, the total mfg cost will be $250 or more when you add in packaging, labor, overhead, QC, rework, tech support, shipping, engineering and all the other costs to build a device. They have to sell at LOT of $0.99 apps to pay for that. Even books at $9.99 will take a while to just break even - and will never show much of a profit. If their book profit split is the same as Apple's, they'd need to sell about $175 worth of books per device just to reach break even and then they can start earning a profit. And even if they sell a million books per device, profit margin is below 30%.

Meanwhile, Apple makes 40-50% even before selling any content. This also raises questions about Amazon's supply chain. Apple sells you a 10" device starting at $499. with significantly better specs than the Amazon device. Apple makes 40+% on iPads, so Apple's total cost including everyone is $300 or less. So it costs Amazon only $50 less to make a device that's half the size, half the storage, and so on? Wow.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #7 of 9
Quote:
Originally Posted by jragosta View Post

If that's true, it's a HUGE mistake for Amazon. With BOM at $202, the total mfg cost will be $250 or more when you add in packaging, labor, overhead, QC, rework, tech support, shipping, engineering and all the other costs to build a device. They have to sell at LOT of $0.99 apps to pay for that. Even books at $9.99 will take a while to just break even - and will never show much of a profit. If their book profit split is the same as Apple's, they'd need to sell about $175 worth of books per device just to reach break even and then they can start earning a profit. And even if they sell a million books per device, profit margin is below 30%.

Meanwhile, Apple makes 40-50% even before selling any content. This also raises questions about Amazon's supply chain. Apple sells you a 10" device starting at $499. with significantly better specs than the Amazon device. Apple makes 40+% on iPads, so Apple's total cost including everyone is $300 or less. So it costs Amazon only $50 less to make a device that's half the size, half the storage, and so on? Wow.

The fact that Apple makes its own exclusive hardware and software is a huge advantage for them.

If Amazon had something like the HP touch pad where they own the hardware and software and ecosystem they could at least compete and lose. But... can't blame Amazon for trying, I think their goal is to sell content and reduce their cost due to the use of the iPad. Time will tell.
post #8 of 9
Quote:
Originally Posted by tylerk36 View Post

China is a huge commercial venture. More and more there are more Chinese people able to purchase electronics products. 1 billion people and take a fraction of that as customer base. The money just pours in.

If only they could bring those profits stateside, then our economy could profit too.
post #9 of 9
Quote:
Originally Posted by Feynman View Post

The Microsoft approach, "lets lose profits while attempting to gain marketshare!"

Genius

Microsoft & Amazon make their money on locked in services (Kindle Fire is only useful really for Amazon content, $80 subscription).

Apple makes it's money on hardware and then services are usually there to make the hardware more appealing.

To be quite honest though I don't think the price of an iPad is at all unreasonable, especially given how cheap applications are for it (and some really awesome ones at that).
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