Apple predicted to offer $200 unsubsidized iPhone in 2013 - Page 2

Quote:

Originally Posted by TheOtherGeoff 

I do not think you will see any iPhone product 'forks' with a subset of the current OS.  The iPod series save for the Touch is not iOS.  iOS is about driving capabilities to mobile apps.  A 'nano' phone would cause both OS and Apps to 'fork' their code, and mix their message.

 

Apple will not create a  iOS 'consumer' 'pro' and 'enterprise' version of the phone in a forward motion (ala Microsoft).  It's about increasing capability for same $$, not cutting existing capabilities to hit a new price point.

But that's the thing...I wouldn't characterize it as any kind of iOS fork. iPod nano is not iOS in any way. It has the veneer of iOS-ness, that's it. They did this to bring iOS mojo to iPod nano without actually cramming iOS into that device. I'm suggesting the same possibility for an possible iPhone nano.

Quote:

Originally Posted by TheOtherGeoff 

If anything, this is where Tim Cook just goes to the supply chain and tells them to cut their prices by 50% and increase shipments by 100% ['revenue neutral' to the supplier], because he knows how to do that.   

If only it were that simple and easy. Sadly* these other companies also think about profits, not just revenue. Were it as easy as you suggest, it would have been done.

*Sadly for your theory, but happily because unprofitable companies have a nasty habit of going away fairly quickly.

Quote:

Originally Posted by al_bundy 

no way, apple only does premium products

You mean like this?

http://store.apple.com/us/browse/home/shop_ipod/family/ipod_shuffle

Quote:

Originally Posted by jragosta 


I agree completely.
Look at the iPhone 3GS. Even without changing a thing, they could probably offer this for $200. All of the tooling and design work is paid for many times over. Manufacturing should be a piece of cake because they've made millions. Bugs are all worked out so quality costs should be low. And so on. Yet a 3GS would easily compete with a $200 phone that the competitors are selling.

Yup. This strategy is also used in game consoles. Sony has been selling the PS3 for years, but it gets cheaper for them all the time because the component costs keep coming down. Also, like the console makers, Apple could continue to upgrade the fab processes used to make the chips in the 3GS, lowering costs while holding performance constant. A smaller, more efficient SOC might also allow Apple to cut the size and cost of the battery while maintaining battery life. 

In short, there are a lot of ways for Apple to keep the performance of the 3GS constant while lowering costs a lot. And it's still a perfectly good phone for a lot of users. And they get to add more customers to the ecosystem, who might buy higher margin products in the future. Makes perfect sense to keep selling it. 

This is actually brilliant - they extend the product life while bringing more users into the family.  Those users will upgrade in the future as well.  Don't assume the margin is much less either.  As production volume increases and parts get consolidated to fewer chips, costs will continue to go down.  The increase in market share is a bonus.  The change in average margin irrelevant.  Its a boost to gross profit.  A year ago i was anti - Apple.  Got an iPad as a gift, so we bought the phone.  Now we'll upgrade to the "5" and pass the 4s to the missus.   Am I switching back   to a Windows phone or Android now? Not likely unless there's a real technological breakthrough.   Only caveat - with the 5 the product is mature.  Further personal upgrades will be less frequent in all likelihood.

Hey blastdoor.  Sorry, didn't see ur post - could saved the time. good thinking...

Originally Posted by Willy05 
Only caveat - with the 5 the product is mature.  Further personal upgrades will be less frequent in all likelihood.

They've only just begun.

It is possible to reach $130 in parts cost, but I doubt they will sell it for $200.  They most probably would start at $299 or at the lowest $249 giving them a much higher margin.

They would probably do this with a phone that looked much like a 3gs (glass on only one side, plastic back) but with the A5 (32nm) and a 5mp camera.  They might add a front facing camera if budget allows but it probably would not be able to.

Quote:

Originally Posted by MJ1970 

 

But that's the thing...I wouldn't characterize it as any kind of iOS fork. iPod nano is not iOS in any way. It has the veneer of iOS-ness, that's it. They did this to bring iOS mojo to iPod nano without actually cramming iOS into that device. I'm suggesting the same possibility for an possible iPhone nano.

 

 

If only it were that simple and easy. Sadly* these other companies also think about profits, not just revenue. Were it as easy as you suggest, it would have been done.

 

*Sadly for your theory, but happily because unprofitable companies have a nasty habit of going away fairly quickly.

first off, you wouldn't, but developers around the world would.  An iPhone is a 'computer that makes calls'  If it can't do what the 2012 iPhone 4s[++] can do, it's not a 'true' iOS device (marrying great HW with great SW for amazingly useful functionality for a 'reasonable' price)

It was a step up from the previous 'nano'  == improvement

I can't see apple creating a brand (iphone) then creating a device (iPhone nano) that doesn't do what all iPhones do, or requires them to bifurcate their message  (you got 2 choices... ).  No... simple message...

Secondly, You're assuming these companies are just breaking even on a 'X year old' technology.  Apple spends top dollar to get their capacity year 1 (and block all others from that capacity).  Year 2, they renegotiate, year 3, the same, because there is no startup costs, there is scaling efficiencies, and most of all, there is competition (supply from other companies who now make the same thing because the original supplier was overbooked by Apple Year 1).

Apple won't demand a company go out of business to satisfy them, but Tim is magical in cutting his supply chain cost.    I agree there is a limit of how low they can go, but in 2 years, component costs should drop by  more than 150% (moore's law).    

It's not 'sad', it's 'business'.

Quote:

Originally Posted by TheOtherGeoff 

first off, you wouldn't, but developers around the world would.  An iPhone is a 'computer that makes calls'  If it can't do what the 2012 iPhone 4s[++] can do, it's not a 'true' iOS device (marrying great HW with great SW for amazingly useful functionality for a 'reasonable' price)

But I'm not claiming it would be an iOS device at all. You seem to be missing this point.

Quote:

Originally Posted by TheOtherGeoff 

I can't see apple creating a brand (iphone) then creating a device (iPhone nano) that doesn't do what all iPhones do, or requires them to bifurcate their message  (you got 2 choices... ).  No... simple message...

Maybe they won't. Maybe they will. Even if you can't imagine it, I can.

Quote:

Originally Posted by TheOtherGeoff 

Secondly, You're assuming these companies are just breaking even on a 'X year old' technology.

No I'm not.

Quote:

Originally Posted by TheOtherGeoff 

Apple won't demand a company go out of business to satisfy them, but Tim is magical in cutting his supply chain cost.

What you call magical isn't.

Quote:

Originally Posted by TheOtherGeoff 

I agree there is a limit of how low they can go, but in 2 years, component costs should drop by  more than 150% (moore's law).

Except that not every component in the product is riding a Moore's Law cost curve. :sigh:

Quote:

Originally Posted by TheOtherGeoff 

It's not 'sad', it's 'business'.

I was being facetious. :rolleyes:

Quote:

Originally Posted by dasanman69 


The unsubsidized full retail price of a 3GS is $375. I doubt they'll be able to shave off $175 in production costs.

what jragosta said.

key word... full retail.   

and one more thing... meeting market demand.

If you figure that the contract was the gating factor "I can't spend $3000 over 2 years on a phone, but I am willing to spend $200 up front, and $50 a month, the months you need a cell phone."

Assume that is say 250Million people saying that around the world. 100Million are going to buy a month-to-month smartphone next year.

you're currently selling 5 million phones a year at $375, with a net profit 40% . (profit: 750M a year)

you drop cost to $200 (and production costs drops to 120), and sacrifice some markup to get 30% net margin (60/phone)

you get currently get ~20% of the general  smart phone market... so assume 25%of this market (and only this market) because now your competing on equal terms with those cheap android phones.

So... now you are selling 25MILLION phones at 60 profit = 1.5Billion in profit 

You doubled your annual profit on the Same SKU.

More importantly, You've   C*ckBlocked Android at this entry level, and these users are likely very entry level  (first apple product, save for an iPod)

You've increased the number of Apple iCloud users

You've increased the number of App Store buyers

You've increase the value of your 'network'   (for app developers, for analysts, for other users)

This is why you need to keep your pricing umbrella low.

Quote:

Originally Posted by jragosta 

I would buy one - even if it's a 3GS. My daughter has been asking to get an iPhone to replace her POS Android phone. I'd pay $200, but not $400 or more.

They are not that bad. I have an xperia mini next to a fleet of Apple products and when roaming abroad it's always the xperia who gets the foreign sim, for the very simple reason that tethering has never been an issue and google maps is just fine whereever you go.

Quote:

Originally Posted by MJ1970 

 

But I'm not claiming it would be an iOS device at all. You seem to be missing this point.

 

and I'm claiming it is.  

Anything with the iPhone branding will

  make calls

  runs iOS.

  runs iOS apps built for an iPhone.

Apple's brand discipline (say 'no' more often than not) demands this.

Quote:

Originally Posted by TheOtherGeoff 

and I'm claiming it is.  

 

Anything with the iPhone branding will

  make calls

  runs iOS.

  runs iOS apps built for an iPhone.

 

 

Apple's brand discipline (say 'no' more often than not) demands this.

So we disagree on what options Apple might consider and how flexible that brand definition is. OK.

Shut up and take my money!

Quote:

Originally Posted by BeltsBear 

It is possible to reach $130 in parts cost, but I doubt they will sell it for $200.  They most probably would start at $299 or at the lowest $249 giving them a much higher margin.

 

They would probably do this with a phone that looked much like a 3gs (glass on only one side, plastic back) but with the A5 (32nm) and a 5mp camera.  They might add a front facing camera if budget allows but it probably would not be able to.

Yes, I think the 3GS will become a "model" - with a new chip, maybe the A5, and higher RAM.

Quote:

Originally Posted by jragosta 


I never said they should sell it at 25%. I said that based on historic numbers, they COULD if they wished. Furthermore, I said that the margin would be 25% if they lowered the price to $200. There's absolutely nothing in anything I said or any published information that says that the CURRENT 3GS margin is 25% - which is what you claimed in post #56.
Besides, it's irrelevant. You're the one who claimed that the link I provided was talking about the 4S. Since it has a reference to 2009, it obviously wasn't.
As for the chart, click on the link I provided above. Look for the table marked exhibit 1.
http://tech.fortune.cnn.com/2010/03/02/what-doth-it-profit-an-iphone/
I really don't think you should be attempting to discuss finances when you can't even follow a simple hyperlink and obviously would rather pull numbers out of your rear than use realistic numbers.

Yes, and Apple are predicting a fairly large fall in margins this quarter which has to be affected by new models, and since the new models are only one month of the quarter the prices must drop substantially. How much of that is the new iPad?

Quote:

Originally Posted by AppleGreen 

There is a big market for a "messaging" Apple phone.  No data plan required.  The carriers here in the U.S. are colluding (I'm looking at you, AT&T and Verizon !!) to raise prices via these ridiculous "shared data" plans.  Have you seen their current offerings of messaging phones?  A bunch of crappy phones.  The selection used to be better.  The carriers want everyone, including kids on family plans, to move to smartphones, so they can increase what each family pays per month.  And, they have increased their upgrade fees substantially to discourage people from upgrading frequently.  They are also making a lot of noise about how much they would like to get rid of subsidies.

iPod Touch, perhaps?

Quote:

Originally Posted by jragosta 

Really? Then please explain how it is that the chart in the article I provided estimated a 57.8% gross margin in 2009 - which was before the iPhone 4 was even introduced? ...

Those iPhones were selling for more than $375 back then.

Quote:

Originally Posted by dasanman69 

Quote:

Originally Posted by TheOtherGeoff 

Apple will make a profit... if they cut prices.. they cut costs by a proportional amount.

The unsubsidized full retail price of a 3GS is $375. I doubt they'll be able to shave off $175 in production costs.

@dasanman69 -- What's your point? Why does Apple need to shave $175 from the production costs of the 3GS? As jragosta pointed out, you replied to a comment about "proportional" profit margins from TheOtherGeoff with a statement about absolute production cost. Are you saying that Apple needs to net a fixed dollar amount per phone (as opposed to a fixed margin)? I'm guessing you were writing too quickly, so maybe you could clarify your point about profits?

Originally Posted by aBeliefSystem 
Good news. Its been cancelled.

The rumored product of which we had no proof is now being cancelled with no proof.

I'm unsure how to feel about this, but there's no proof that I am.

If and when Apple releases the 3GS. It will surely have a lot of buyers.

What i think is, it has advantages for Apple itself.

I'd like to state a few reasons here.

1. It gives a lot of flexibilty, which is a good choice.

2. In my part of the world, not many people have a liking and appreciation for an Apple device. So this product can easily make a good impression to them since it costs cheap.

3. Again, in my part of the world, no cell phone comes tied to any operators / carriers. So an unsubsidized phone is the only way we get to use iPhones.

4. Even with unchanged specs, the 3GS will still kicka**. Here, 90% of the ''cell phone using population'' doesn't use 3G. And by any standards, the 3GS will still be an high-end device here.

PS. : Most of my views are biased in favor of India and its people's lifestyle. Incase Apple really does it and launches it here too.. it is going to sell well. Period.