A CDMA iPhone still makes sense from a business point-of-view. From Apple's latest set of results, the iPhone is selling about 3 million units in the US per quarter. Judging by the ending of the O2 exclusivity deal in the UK, a CDMA iPhone could double that number to 6 million units. With an average selling price of $620 and a profit margin of around 40%, that's a potential extra $3 billion profit a year.
A CDMA iPhone still makes sense from a business point-of-view.
Sounds like a worthwhile venture to me.
In what world?
Apple has historically deployed and supported next generation technologies, NOT support those that will be phased out over the next few years.
I'll spare us all a list...
There's a possibility that Apple will use the (Qualcomm?) combo 3G/CDMA chip that's been rumored to be released later this year in the next generation iPhone. But, who knows?
A CDMA iPhone still makes sense from a business point-of-view. From Apple's latest set of results, the iPhone is selling about 3 million units in the US per quarter. Judging by the ending of the O2 exclusivity deal in the UK, a CDMA iPhone could double that number to 6 million units. With an average selling price of $620 and a profit margin of around 40%, that's a potential extra $3 billion profit a year.
Sounds like a worthwhile venture to me.
While I think it is a forgone conclusion that Verizon will offer the iPhone in the very near future, I must point out that the ASP for the iPhone will come down once exclusitivity with ATT runs its course. ASP will likely come down at least $100 once no exclusivity exists.
While I think it is a forgone conclusion that Verizon will offer the iPhone in the very near future, I must point out that the ASP for the iPhone will come down once exclusitivity with ATT runs its course. ASP will likely come down at least $100 once no exclusivity exists.
What's you rationale for either of these predictions?
Wasn't there a Verizon story the day before the iPad launch about it preparing for something big? Did they announce anything? Has anyone heard anything?
I'm not sure where you get your $5M design cost, but no matter. I'm sure Apple can afford whatever it costs, and probably already have working CDMA models, just as a matter of course.
But where I'm not sure about your argument is the assertion of low costs of inventory and supply chain mgmt. It might actually be trickier than you think. I could envision, especially on the iPhone side, in the first 6-12 months of AT&T + Verizon availability, major problems predicting demand between the two skus with all of the churn that would likely happen. It could actually be a major headache to manage. That uncertainty might even extend beyond 12 months due to the existence of two year contracts. I could easily see a situation of too many GSM phones and not enough CDMA phones, or vice versa.
Apple would no doubt eventually dial it in, and they might be able to manage it well right out of the gate, but I frankly could envision a scenario where they struggle with it. The other thing to remember, Apple intentionally narrows their product focus in many aspects of their business. How many times have you read, "if Apple only made... they would sell bazillions of 'em"? Name your technology, mini towers for example. Apple seemingly leaves alot of sales on the table, but last time I checked, they were doing pretty well.
A former Virgin Mobile executive stated that it would cost something like $5 million to design a CDMA iphone variant.
Everybody sells dozens and dozens of different phone models. It's not that difficult and it's not that expensive to procure and inventory all those models. Apple already enjoys something like a 50% profit margin on the iphone. Procuring, selling and inventorying multiple model would drop that profit margin down to what? 40-45%? That's still sky high (in the blackberry category) when you compare Nokia with a profit margin of 12-14%.
There is no predicting demand. Verizon is going to buy certain number of iphones. It's not unlike how the Russian carriers got screwed by agreeing to buy several million of iphones and couldn't sell any of them. How is that Apple's problem if the Russians couldn't sell them?
A CDMA iPhone still makes sense from a business point-of-view. From Apple's latest set of results, the iPhone is selling about 3 million units in the US per quarter. Judging by the ending of the O2 exclusivity deal in the UK, a CDMA iPhone could double that number to 6 million units. With an average selling price of $620 and a profit margin of around 40%, that's a potential extra $3 billion profit a year.
Sounds like a worthwhile venture to me.
You've successfully argued for a T-Mobile Variant.... But not a Verizon Variant. A T-mobile "upgrade" would cost peanuts and still be perfect in all markets, compared to an entirely new chipset, manufacturing line, etc.
You've successfully argued for a T-Mobile Variant.... But not a Verizon Variant. A T-mobile "upgrade" would cost peanuts and still be perfect in all markets, compared to an entirely new chipset, manufacturing line, etc.
You people overestimate the added cost of a CDMA iphone. The added cost is a rounding error to the billions of dollars that Apple could get from a Verizon iphone deal.
What's you rationale for either of these predictions?
The economics of offering a CDMA Verizon iPhone are overwhelmingly positive. The number of incremental units sold will VASTLY outweigh the development costs and other inventory and logistics management responsibilities. Apple is a $50B annual revenue company. Rest assured they can manage the inventory and supply chain for a new version of the iPhone. Additionally, it will become more and more important in the VERY near term to build market share for the phone as Android continues to grow its share. The last thing Apple wants is for developers to migrate to a different platform that may have more users in the long-term. So, it is logical that Apple will pursue the fastest most logical and most financially lucrative strategy to markedly and quickly increase iPhone sales and smart phone market share....offer a Verizon phone and Apple ensures it will pick up significant market share and continue to not only maintain its developer base but grow it significantly...The biggest advantage Apple currently has over Android and the other platforms is the developer base and they can widen this advantage by getting more units into consumers hands. Verizon iPhone just makes too much sense from this perspective.
As for why ASP will come down it is a foregone conclusion that subsidies will come down once exclusivity isn't offered to the carrier in return for the subsidy. Apple isn't going to pass the subsidy reduction on to customers to the total price of the phone will come down. The really superb news for Apple shareholders is that future iPHones will likely utilize some sort of A2 chip (in-house chip similar to the A4 in the iPad) which will bring down total manufacturing costs so that margins won't erode as quickly as one would expect when the price comes down $100 or so. Apple is in a VERY strong position right now and the next year should be very big for shareholders.
I feel like I'm back in 2007. These Verizon iPhone rumors started the day after the first iPhone was launched.
First it was "Verizon will get the iPhone by Christmas." (2007)
Then it was "Verizon will have the iPhone when the new one comes out." (mid-2008)
Then it was "Well, they didn't get it at the launch of the 3G but they're waiting for a special Christmas launch." (late 2008)
Then it was "They'll finally get one when the third model comes out." (mid-2009)
Then it was "Well, they didn't get it at the launch of the 3GS but they're waiting for a special Christmas launch. Verizon will have the iPhone by Christmas." (late 2009)
Then it was "Apple will announce a Verizon tablet and Verizon iPhone at their event on Feb. 27th." (this year)
Working in the industry, I have personally witnessed Verizon business reps telling customers (existing and potential) that they would be getting the iPhone "by the end of the year" every year since the original launch, and it's gotten even more frequent in the last 2 years, especially 2009.
It's time to give it up, people, it's not going to happen. All the posts above that talk about it being "certain" or an "unequivocal certainty" that there will be a Verizon iPhone in the next 3-6 months or even this year are some of the most ridiculous things I have read in a long time. You are either delusional, not very intelligent, or simply extremely hopeful. I don't know which.
After what I've witnessed in the field and how these are continuing to persist after the iPad announcement, albeit in the ridiculous and weak form presented in this article - I'm fairly confident at this point that this is indeed vaporware, largely perpetrated by Verizon (either intentionally from the top or by the "culture" of their employees) to attempt to retain customers.
The economics of a CDMA Verizon iPhone are only positive for Verizon. In case you haven't been paying attention, Apple concentrates on cornering a key part of a market. They are the last company that tries to be everything to everybody, esp. if it means smaller margins. You have to admit, financially this policy has worked pretty well for their bottom line. Pissing money down the CDMA rat hole isn't how Apple does business; at best it would require a phone that would do both vs. an additional set of SKUs (and Qualcomm wants too much for their new dual 3G chip).
Verizon will be able to get on board when they start rolling out LTE-based 4G, and not until. I wonder how that's going?
Quote:
Originally Posted by adamthompson3232
The economics of offering a CDMA Verizon iPhone are overwhelmingly positive. The number of incremental units sold will VASTLY outweigh the development costs and other inventory and logistics management responsibilities. Apple is a $50B annual revenue company. Rest assured they can manage the inventory and supply chain for a new version of the iPhone. Additionally, it will become more and more important in the VERY near term to build market share for the phone as Android continues to grow its share. The last thing Apple wants is for developers to migrate to a different platform that may have more users in the long-term. So, it is logical that Apple will pursue the fastest most logical and most financially lucrative strategy to markedly and quickly increase iPhone sales and smart phone market share....offer a Verizon phone and Apple ensures it will pick up significant market share and continue to not only maintain its developer base but grow it significantly...The biggest advantage Apple currently has over Android and the other platforms is the developer base and they can widen this advantage by getting more units into consumers hands. Verizon iPhone just makes too much sense from this perspective.
As for why ASP will come down it is a foregone conclusion that subsidies will come down once exclusivity isn't offered to the carrier in return for the subsidy. Apple isn't going to pass the subsidy reduction on to customers to the total price of the phone will come down. The really superb news for Apple shareholders is that future iPHones will likely utilize some sort of A2 chip (in-house chip similar to the A4 in the iPad) which will bring down total manufacturing costs so that margins won't erode as quickly as one would expect when the price comes down $100 or so. Apple is in a VERY strong position right now and the next year should be very big for shareholders.
The economics of a CDMA Verizon iPhone are only positive for Verizon. In case you haven't been paying attention, Apple concentrates on cornering a key part of a market. They are the last company that tries to be everything to everybody, esp. if it means smaller margins. You have to admit, financially this policy has worked pretty well for their bottom line. Pissing money down the CDMA rat hole isn't how Apple does business; at best it would require a phone that would do both vs. an additional set of SKUs (and Qualcomm wants too much for their new dual 3G chip).
Verizon will be able to get on board when they start rolling out LTE-based 4G, and not until. I wonder how that's going?
This is where you people lost me --- you keep on saying that Apple doesn't care about gross market share.
Verizon is a key part of the US wireless market. If Apple cares about high margin, low volume business --- then Verizon is naturally part of that equation.
A CDMA iphone is a concentrated play to the cash rich Americans, Japanese and Korean consumers.
Comments
Verizon attacked the iPhone, there is no way Apple would reward them with making an iPhone for them
Sounds like a worthwhile venture to me.
A CDMA iPhone still makes sense from a business point-of-view.
Sounds like a worthwhile venture to me.
In what world?
Apple has historically deployed and supported next generation technologies, NOT support those that will be phased out over the next few years.
I'll spare us all a list...
There's a possibility that Apple will use the (Qualcomm?) combo 3G/CDMA chip that's been rumored to be released later this year in the next generation iPhone. But, who knows?
A CDMA iPhone still makes sense from a business point-of-view. From Apple's latest set of results, the iPhone is selling about 3 million units in the US per quarter. Judging by the ending of the O2 exclusivity deal in the UK, a CDMA iPhone could double that number to 6 million units. With an average selling price of $620 and a profit margin of around 40%, that's a potential extra $3 billion profit a year.
Sounds like a worthwhile venture to me.
While I think it is a forgone conclusion that Verizon will offer the iPhone in the very near future, I must point out that the ASP for the iPhone will come down once exclusitivity with ATT runs its course. ASP will likely come down at least $100 once no exclusivity exists.
While I think it is a forgone conclusion that Verizon will offer the iPhone in the very near future, I must point out that the ASP for the iPhone will come down once exclusitivity with ATT runs its course. ASP will likely come down at least $100 once no exclusivity exists.
What's you rationale for either of these predictions?
I'm not sure where you get your $5M design cost, but no matter. I'm sure Apple can afford whatever it costs, and probably already have working CDMA models, just as a matter of course.
But where I'm not sure about your argument is the assertion of low costs of inventory and supply chain mgmt. It might actually be trickier than you think. I could envision, especially on the iPhone side, in the first 6-12 months of AT&T + Verizon availability, major problems predicting demand between the two skus with all of the churn that would likely happen. It could actually be a major headache to manage. That uncertainty might even extend beyond 12 months due to the existence of two year contracts. I could easily see a situation of too many GSM phones and not enough CDMA phones, or vice versa.
Apple would no doubt eventually dial it in, and they might be able to manage it well right out of the gate, but I frankly could envision a scenario where they struggle with it. The other thing to remember, Apple intentionally narrows their product focus in many aspects of their business. How many times have you read, "if Apple only made... they would sell bazillions of 'em"? Name your technology, mini towers for example. Apple seemingly leaves alot of sales on the table, but last time I checked, they were doing pretty well.
A former Virgin Mobile executive stated that it would cost something like $5 million to design a CDMA iphone variant.
http://www.businessinsider.com/why-a...xt-year-2009-9
Everybody sells dozens and dozens of different phone models. It's not that difficult and it's not that expensive to procure and inventory all those models. Apple already enjoys something like a 50% profit margin on the iphone. Procuring, selling and inventorying multiple model would drop that profit margin down to what? 40-45%? That's still sky high (in the blackberry category) when you compare Nokia with a profit margin of 12-14%.
There is no predicting demand. Verizon is going to buy certain number of iphones. It's not unlike how the Russian carriers got screwed by agreeing to buy several million of iphones and couldn't sell any of them. How is that Apple's problem if the Russians couldn't sell them?
A CDMA iPhone still makes sense from a business point-of-view. From Apple's latest set of results, the iPhone is selling about 3 million units in the US per quarter. Judging by the ending of the O2 exclusivity deal in the UK, a CDMA iPhone could double that number to 6 million units. With an average selling price of $620 and a profit margin of around 40%, that's a potential extra $3 billion profit a year.
Sounds like a worthwhile venture to me.
You've successfully argued for a T-Mobile Variant.... But not a Verizon Variant. A T-mobile "upgrade" would cost peanuts and still be perfect in all markets, compared to an entirely new chipset, manufacturing line, etc.
You've successfully argued for a T-Mobile Variant.... But not a Verizon Variant. A T-mobile "upgrade" would cost peanuts and still be perfect in all markets, compared to an entirely new chipset, manufacturing line, etc.
You people overestimate the added cost of a CDMA iphone. The added cost is a rounding error to the billions of dollars that Apple could get from a Verizon iphone deal.
What's you rationale for either of these predictions?
The economics of offering a CDMA Verizon iPhone are overwhelmingly positive. The number of incremental units sold will VASTLY outweigh the development costs and other inventory and logistics management responsibilities. Apple is a $50B annual revenue company. Rest assured they can manage the inventory and supply chain for a new version of the iPhone. Additionally, it will become more and more important in the VERY near term to build market share for the phone as Android continues to grow its share. The last thing Apple wants is for developers to migrate to a different platform that may have more users in the long-term. So, it is logical that Apple will pursue the fastest most logical and most financially lucrative strategy to markedly and quickly increase iPhone sales and smart phone market share....offer a Verizon phone and Apple ensures it will pick up significant market share and continue to not only maintain its developer base but grow it significantly...The biggest advantage Apple currently has over Android and the other platforms is the developer base and they can widen this advantage by getting more units into consumers hands. Verizon iPhone just makes too much sense from this perspective.
As for why ASP will come down it is a foregone conclusion that subsidies will come down once exclusivity isn't offered to the carrier in return for the subsidy. Apple isn't going to pass the subsidy reduction on to customers to the total price of the phone will come down. The really superb news for Apple shareholders is that future iPHones will likely utilize some sort of A2 chip (in-house chip similar to the A4 in the iPad) which will bring down total manufacturing costs so that margins won't erode as quickly as one would expect when the price comes down $100 or so. Apple is in a VERY strong position right now and the next year should be very big for shareholders.
First it was "Verizon will get the iPhone by Christmas." (2007)
Then it was "Verizon will have the iPhone when the new one comes out." (mid-2008)
Then it was "Well, they didn't get it at the launch of the 3G but they're waiting for a special Christmas launch." (late 2008)
Then it was "They'll finally get one when the third model comes out." (mid-2009)
Then it was "Well, they didn't get it at the launch of the 3GS but they're waiting for a special Christmas launch. Verizon will have the iPhone by Christmas." (late 2009)
Then it was "Apple will announce a Verizon tablet and Verizon iPhone at their event on Feb. 27th." (this year)
Working in the industry, I have personally witnessed Verizon business reps telling customers (existing and potential) that they would be getting the iPhone "by the end of the year" every year since the original launch, and it's gotten even more frequent in the last 2 years, especially 2009.
It's time to give it up, people, it's not going to happen. All the posts above that talk about it being "certain" or an "unequivocal certainty" that there will be a Verizon iPhone in the next 3-6 months or even this year are some of the most ridiculous things I have read in a long time. You are either delusional, not very intelligent, or simply extremely hopeful. I don't know which.
After what I've witnessed in the field and how these are continuing to persist after the iPad announcement, albeit in the ridiculous and weak form presented in this article - I'm fairly confident at this point that this is indeed vaporware, largely perpetrated by Verizon (either intentionally from the top or by the "culture" of their employees) to attempt to retain customers.
Verizon will be able to get on board when they start rolling out LTE-based 4G, and not until. I wonder how that's going?
The economics of offering a CDMA Verizon iPhone are overwhelmingly positive. The number of incremental units sold will VASTLY outweigh the development costs and other inventory and logistics management responsibilities. Apple is a $50B annual revenue company. Rest assured they can manage the inventory and supply chain for a new version of the iPhone. Additionally, it will become more and more important in the VERY near term to build market share for the phone as Android continues to grow its share. The last thing Apple wants is for developers to migrate to a different platform that may have more users in the long-term. So, it is logical that Apple will pursue the fastest most logical and most financially lucrative strategy to markedly and quickly increase iPhone sales and smart phone market share....offer a Verizon phone and Apple ensures it will pick up significant market share and continue to not only maintain its developer base but grow it significantly...The biggest advantage Apple currently has over Android and the other platforms is the developer base and they can widen this advantage by getting more units into consumers hands. Verizon iPhone just makes too much sense from this perspective.
As for why ASP will come down it is a foregone conclusion that subsidies will come down once exclusivity isn't offered to the carrier in return for the subsidy. Apple isn't going to pass the subsidy reduction on to customers to the total price of the phone will come down. The really superb news for Apple shareholders is that future iPHones will likely utilize some sort of A2 chip (in-house chip similar to the A4 in the iPad) which will bring down total manufacturing costs so that margins won't erode as quickly as one would expect when the price comes down $100 or so. Apple is in a VERY strong position right now and the next year should be very big for shareholders.
The economics of a CDMA Verizon iPhone are only positive for Verizon. In case you haven't been paying attention, Apple concentrates on cornering a key part of a market. They are the last company that tries to be everything to everybody, esp. if it means smaller margins. You have to admit, financially this policy has worked pretty well for their bottom line. Pissing money down the CDMA rat hole isn't how Apple does business; at best it would require a phone that would do both vs. an additional set of SKUs (and Qualcomm wants too much for their new dual 3G chip).
Verizon will be able to get on board when they start rolling out LTE-based 4G, and not until. I wonder how that's going?
This is where you people lost me --- you keep on saying that Apple doesn't care about gross market share.
Verizon is a key part of the US wireless market. If Apple cares about high margin, low volume business --- then Verizon is naturally part of that equation.
A CDMA iphone is a concentrated play to the cash rich Americans, Japanese and Korean consumers.