Cost to build Apple's new iPhone 3G S estimated at $179

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  • Reply 61 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by macslut View Post


    Wow, intense much?



    You're right. I had read the whitepaper PDF and other documents on the Infineon chipset and believed it supported CDMA. It doesn't, it supports WCDMA...not the same thing. I'm sorry if this makes me delusional and idiotic, but at least I'm not alone.



    Still, my point still stands, the direct cost of supporting CDMA isn't the real issue when you compare it to how many more iPhones they could sell with Verizon. It's the other issues involved that have prevented this from happening.



    Well some people keep on spouting absolute crap about this phone. With the first version it was that it secretly supported 3G, with the previous model that it secretly supported 7.2Mbps HSDPA and then your comment. I think misinformation should be put down. Just because I have my unique personal style is neither here nor there.



    Adding is an issue. It makes the handset much larger, more expensive, less efficient or makes manufacturing more expensive (due to more models, less volume).



    All this for a standard that represents 10% of the market and is shrinking. CDMA is dead. It lost. Just because 2 US carriers support it doesn't make the economics of it any better.
  • Reply 62 of 114
    mactrippermactripper Posts: 1,328member
    Post math



    iPhone 3Gs cost $180 materials $20 labor and shipping =$200



    Sells for $599 aka $600 - $200 = $400 margin. (spare r&d etc for now)



    -------



    $200 for iPhone 3Gs + AT&T contract $100 (apx) a month for 24 months = $2600



    AT&T voice unlimited $30 a month x 24 months = $720



    $2600 - $720 = $1880



    To determine AT&T data lets assume $30 a month for another $720 deducted so $1880 - $720 = $1160



    So $1160 - ($600-$200) = $760







    AT&T got their $60 a month (for 24 months) for voice and data.



    Apple got their $600 for the iPhone.





    So where is that spare $760 going?
  • Reply 63 of 114
    kirkrrkirkrr Posts: 6member
    Verizon is a problem, not a feature. If the US had not built out 2 parallel, redundant, and mutually incompatible cellular infrastructures, the consumers would be so far ahead in capabilities and features over today, it would not be funny. Instead, Verizon uses CDMA, which is only in the US, Canada, Japan and S. Korea. The rest of the world is GSM.



    Billions and billions wasted on creating incompatible networks! Like having standard and narrow gauge railroads everyplace - incompatible, and everything redundant.



    Apple products have always been open data formats, supporting industry standards, or at the very least, providing bi-direction data translation capabilities, unless contract (RIAA comes to mind) obligations negated this. Hardware has always been proprietary - and quality - a price I readily pay, especially since it is cheaper than the top quality gear from any of the top tier players. (go buy a Nokia N71x at about $800 - where is the outrage on that??)



    Oh, this iPhone cost is for the hardware - assembly is negligible. But R&D is not rolled into this. I would guess that about 4 million iPhones would need to be sold, before the product was profitable to Apple. Then there is the R&D for the next version, and support, and overhead.



    Based on this logic, a B2 Steath bomber is about $18M LESS than a 747. Forget about the $19 BILLION dollars of R&D that went into creating it in the first place - that is free, right? makes the $247M B2 cost over $1B a copy. If you amortize the factory and R&D cost of a Saturn automobile, and make 15 of them, they would cost $178M each - place your order here. The materials cost for a Saturn is less than 20% of the sales price. Are they ripping you off, or making massive profits?
  • Reply 64 of 114
    Quote:
    Originally Posted by shanmugam View Post


    mostly an event in first weeks September with



    1) Snow Leopard release date

    2) iPod update

    3) iMac update with some quad config and shipping with Snow Leopard



    I hope we see the new auto-focus camera from the iPhone in the iMac.

    The nice thing is that because the components can be used in both iPhones and Macs, they can save money on the desktop components.



    The new MacBooks have the same integrated headphone/mic port as the iPhone.
  • Reply 65 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by MacTripper View Post






    So where is that spare $760 going?



    Ignoring the fact that there is no reason to think your numbers are correct, the profit goes into the bank. Did you really wonder that?



    The better question: do you think that companies profiting is wrong?



    The corollary: do you put any money in savings at the end of the month from your work?



    The Socratic: do you understand why those two questions are related?
  • Reply 66 of 114
    macslutmacslut Posts: 514member
    Quote:
    Originally Posted by merdhead View Post


    I think misinformation should be put down. Just because I have my unique personal style is neither here nor there.



    No, I guess not, if you want to be a jerk and hurl personal insults instead of simply correcting misinformation.



    Quote:
    Originally Posted by merdhead View Post


    Adding is an issue. It makes the handset much larger, more expensive, less efficient or makes manufacturing more expensive (due to more models, less volume).



    All this for a standard that represents 10% of the market and is shrinking. CDMA is dead. It lost. Just because 2 US carriers support it doesn't make the economics of it any better.



    I wasn't talking necessarily about adding. As the iPhone would be sold through Verizon, or to Verizon customers like Apple does for AT&T, it could be done the same way RIM and others do this...separate phones for different carriers.



    CDMA is just as dead as GSM in the US. It's worth noting that in the US Apple is selling the iPhone for a network with around 78 million subscribers, when Verizon has about 87 million.



    Sure, people are switching from one to another, but many can't or don't want to.



    What's you most outrageous over-estimate of developing, shipping, marketing and all costs around a CDMA iPhone? $1 billion dollars?



    At that cost, it sure makes sense to have a CDMA iPhone given the profit Apple makes per phone and the number of additional phones they'd sell.



    Again though, the important part here is that my point is that there are other factors, like special arrangements with AT&T that's preventing this from happening. The actual cost of offering a CDMA iPhone in addition to a GSM iPhone isn't the reason.
  • Reply 67 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by macslut View Post


    No, I guess not, if you want to be a jerk and hurl personal insults instead of simply correcting misinformation.







    I wasn't talking necessarily about adding. As the iPhone would be sold through Verizon, or to Verizon customers like Apple does for AT&T, it could be done the same way RIM and others do this...separate phones for different carriers.



    CDMA is just as dead as GSM in the US. It's worth noting that in the US Apple is selling the iPhone for a network with around 78 million subscribers, when Verizon has about 87 million.



    Sure, people are switching from one to another, but many can't or don't want to.



    What's you most outrageous over-estimate of developing, shipping, marketing and all costs around a CDMA iPhone? $1 billion dollars?



    At that cost, it sure makes sense to have a CDMA iPhone given the profit Apple makes per phone and the number of additional phones they'd sell.



    Again though, the important part here is that my point is that there are other factors, like special arrangements with AT&T that's preventing this from happening. The actual cost of offering a CDMA iPhone in addition to a GSM iPhone isn't the reason.



    You're calling me a jerk and complain about me hurling insults? Then you're a filthy hypocrite.



    Obviously you're not very bright so I'll spell it out in big letters: AMERICA IS NOT THE ENTIRE EARTH, ITS ONLY A (small) PART OF THE GLOBAL MARKET AND 87 MILLION iS ABOUT 2% OF 4 BILLION (the size of the global GSM market, see http://3gamericas.com/).



    So for a market increase of about 2% or 4% you want Apple to double their hardware and firmware development costs and risks and increase their manufacturing costs (read my post, it says "or" to cover both the possibility of adding it or having a different version).



    See, I wasn't being a jerk, you are an idiot, unless you admit that the above is a really bad business idea and you just want a CDMA iPhone because you want one. Or do you see a potential CDMA market on Mars?
  • Reply 68 of 114
    Quote:
    Originally Posted by macslut View Post


    I believe it always has, but of course the firmware doesn't. I've never understood the claims that it would be an issue of cost for Apple to support CDMA...other than the exclusivity/subsidy deal with AT&T. However, even that I don't fully understand because it seems like Verizon and AT&T would get in a subsidy war if Apple released it for Verizon as well.



    I'm not saying it wouldn't cost anything to develop and test the CDMA firmware, but the cost would pale in comparison to the additional sales.



    IMHO I don't think it would run as well on the Verizon network and Apple knows that. If you search youtube for the iPhone 3Gs vs Palm Pre vs Blackberry Storm, you will see the speed differences when opening pages thru their built in browsers. Yes, I realize that the iPhone may have faster components, but the Blackberry Storm loads pages as if it were on he EDGE network, its horrible. The Palm Pre is just milli seconds behind the iPhone 3Gs.



    But obviously, I'm just pulling this out of my ass, but I don't think it would work as well perhaps and thats not something Apple wants to deal with.
  • Reply 69 of 114
    mr. hmr. h Posts: 4,700member
    Quote:
    Originally Posted by cameronj View Post


    Ignoring the fact that there is no reason to think your numbers are correct, the profit goes into the bank. Did you really wonder that?



    The numbers he used are all publicly available; they seem correct to me. I think really he was wondering who gets the extra. AT&T? Apple? If both, in what proportion? It's not really important but I guess a bit interesting in terms of seeing how good a deal Apple got out of AT&T (i.e., just how much is AT&T paying Apple for the iPhone?).
  • Reply 70 of 114
    Quote:
    Originally Posted by Mr. H View Post


    The numbers he used are all publicly available; they seem correct to me. I think really he was wondering who gets the extra. AT&T? Apple? If both, in what proportion? It's not really important but I guess a bit interesting in terms of seeing how good a deal Apple got out of AT&T (i.e., just how much is AT&T paying Apple for the iPhone?).



    Haha! Probably paying $499 for the phone and thats exactly how much I payed for it this year because I wasn't eligible. Now when next year rolls around I won't be "eligible" then either because I payed $499 and not $699. So, essentially the phone has been completely paid for and ATT makes profit off my $180 monthly bill.





    That would suck. Obviously if ATT gets a deal on these phones off of Apple's $699 price, then that means ATT has less money to recoup from us when next year rolls around. How much you want to bet ATT doesn't care?
  • Reply 71 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by merdhead View Post


    See, I wasn't being a jerk, you are an idiot, unless you admit that the above is a really bad business idea and you just want a CDMA iPhone because you want one. Or do you see a potential CDMA market on Mars?



    The problem is, you're wrong. It doesn't matter how small of a percentage of the market that CDMA makes up, just the USA customers alone (where we can more easily predict the device's popularity) would easily justify the expense of making it. The profit just from selling 10-15 million in the USA would be $400 (profit per phone) times 10,000,000 = $4,000,000,000. The additional costs incurred by development and manufacturing of a second phone would not approach that cost.



    Not that it matters, since the contract with ATT does not allow it, but there's no arguing the business case for it, ignoring that contract.
  • Reply 72 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by Mr. H View Post


    The numbers he used are all publicly available; they seem correct to me. I think really he was wondering who gets the extra. AT&T? Apple? If both, in what proportion? It's not really important but I guess a bit interesting in terms of seeing how good a deal Apple got out of AT&T (i.e., just how much is AT&T paying Apple for the iPhone?).



    Why would anyone think that any of the profit goes to Apple? There is no revenue sharing anymore, so what money you pay that goes to ATT stays with ATT, obviously.
  • Reply 73 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by Footloose301 View Post


    That would suck. Obviously if ATT gets a deal on these phones off of Apple's $699 price, then that means ATT has less money to recoup from us when next year rolls around. How much you want to bet ATT doesn't care?



    Doesn't care? Of course they care! They love it! That's called a BUSINESS MODEL. You buy something and you sign a contract. You honor the contract, they make money.



    Duh!
  • Reply 74 of 114
    mr. hmr. h Posts: 4,700member
    Quote:
    Originally Posted by cameronj View Post


    Why would anyone think that any of the profit goes to Apple? There is no revenue sharing anymore, so what money you pay that goes to ATT stays with ATT, obviously.



    It's not obvious. Show me the proof that AT&T pays Apple $600 per iPhone and not more. Don't get me wrong, I don't care who's making the most profit here; AT&T are free to charge whatever they want.
  • Reply 75 of 114
    jlljll Posts: 2,709member
    Quote:
    Originally Posted by anantksundaram View Post


    Actually, Apple assesses the life cycle carbon footprint for every one of its products, and gets it verified by a third party. The data for the iPhone are here: http://images.apple.com/environment/...tal-Report.pdf



    Transport accounts for 5% of the iPhone's estimated 55Kg CO2e (94% is from production and use, and that would remain largely the same regardless of where manufactured).



    Even if Apple made a plant in the US, all the parts will come from Asia anyway.
  • Reply 76 of 114
    Quote:
    Originally Posted by cameronj View Post


    Doesn't care? Of course they care! They love it! That's called a BUSINESS MODEL. You buy something and you sign a contract. You honor the contract, they make money.



    Duh!



    No shit. I was being sarcastic.
  • Reply 77 of 114
    macslutmacslut Posts: 514member
    Quote:
    Originally Posted by merdhead View Post


    You're calling me a jerk and complain about me hurling insults? Then you're a filthy hypocrite.



    It's not being hypocritical to point out that you're acting like a jerk when you're hurling unwarranted insults.



    Quote:

    Obviously you're not very bright so I'll spell it out in big letters: AMERICA IS NOT THE ENTIRE EARTH, ITS ONLY A (small) PART OF THE GLOBAL MARKET AND 87 MILLION iS ABOUT 2% OF 4 BILLION (the size of the global GSM market



    There you go again....anyway, it doesn't matter if CDMA and Verizon represent .0000001% of the global market. It has nothing to do with whether or not Apple could develop CDMA for a cost that would yield a profit. As cameronj points out, roughly $4 Billion could be made...of course you'd have to minus out the amount for developing, the CDMA iPhone as well as other associated costs, and minus out the number of people who would've switched anyway, but that still leaves a HUGE margin for profit.



    Quote:

    So for a market increase of about 2% or 4% you want Apple to double their hardware and firmware development costs and risks and increase their manufacturing costs (read my post, it says "or" to cover both the possibility of adding it or having a different version).



    It's funny because in every single one of my posts, I state that Apple could have reasons relating to their relationship with AT&T for not doing this. So no, I'm not saying that I want Apple to do this. I'll repeat it again, the thought that they could not sell a CDMA iPhone for a direct profit is not the reason why Apple isn't doing it.



    Quote:

    See, I wasn't being a jerk, you are an idiot, unless you admit that the above is a really bad business idea and you just want a CDMA iPhone because you want one. Or do you see a potential CDMA market on Mars?



    I don't want a CDMA iPhone. I can't stand Verizon, and I'm really happy with AT&T. Now, if you'd like to explain why it would cost more to sell a CDMA iPhone than what Apple would earn from those 87 million Verizon subscribers who want an iPhone but don't or can't switch to AT&T, then maybe you'd come across as less of a jerk, but I don't think you can (either rationalize your position, or not act like a jerk).
  • Reply 78 of 114
    jfanningjfanning Posts: 3,385member
    Quote:
    Originally Posted by macslut View Post


    There you go again....anyway, it doesn't matter if CDMA and Verizon represent .0000001% of the global market. It has nothing to do with whether or not Apple could develop CDMA for a cost that would yield a profit. As cameronj points out, roughly $4 Billion could be made...of course you'd have to minus out the amount for developing, the CDMA iPhone as well as other associated costs, and minus out the number of people who would've switched anyway, but that still leaves a HUGE margin for profit.



    Maybe they don't want to develop a product for a service with no long term future?
  • Reply 79 of 114
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by jfanning View Post


    Maybe they don't want to develop a product for a service with no long term future?



    It?s quite possible, but CDMA will be around for many years to come. Even though Verizon is claiming to start LTE shortly it?ll be years before it has the coverage that CDMA2000 currently has, in that time CDMA and CDMA2000 will still be used heavily. Then there is the issue with LTE chips that small and power efficient enough to be used in phones; that looks like it?ll be several more years before those are feasible.



    There is plenty for Apple to make a bundle on CDMA-based iPhones, but I don?t think it has anything to do with what could they do, but instead with their business model which seems to require a carrier lock in.
  • Reply 80 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by macslut View Post


    It's not being hypocritical to point out that you're acting like a jerk when you're hurling unwarranted insults.







    There you go again....anyway, it doesn't matter if CDMA and Verizon represent .0000001% of the global market. It has nothing to do with whether or not Apple could develop CDMA for a cost that would yield a profit. As cameronj points out, roughly $4 Billion could be made...of course you'd have to minus out the amount for developing, the CDMA iPhone as well as other associated costs, and minus out the number of people who would've switched anyway, but that still leaves a HUGE margin for profit.







    It's funny because in every single one of my posts, I state that Apple could have reasons relating to their relationship with AT&T for not doing this. So no, I'm not saying that I want Apple to do this. I'll repeat it again, the thought that they could not sell a CDMA iPhone for a direct profit is not the reason why Apple isn't doing it.







    I don't want a CDMA iPhone. I can't stand Verizon, and I'm really happy with AT&T. Now, if you'd like to explain why it would cost more to sell a CDMA iPhone than what Apple would earn from those 87 million Verizon subscribers who want an iPhone but don't or can't switch to AT&T, then maybe you'd come across as less of a jerk, but I don't think you can (either rationalize your position, or not act like a jerk).



    So now that you've wowed us with you ignorance of wireless hardware, you've moved on to business and economics. Have you no self respect man? You seem to be making up the rules as you go along just to prop up your pointless argument.



    You can't just partition off wireless customers into one company or another and then say they'll all buy an iPhone if they just had the opportunity. Anyone who really wanted an iPhone would have moved to AT&T some time ago. You'd pick up a marginal number, not a flood, of customers if you didn't require them to change phone companies. The idea that you're somehow going to pick up masses of customers because you support another company's wireless standard is specious at best. They're willing to shell out masses of money for the phone (or in monthly fees - same diff) but they just don't want to change phone companies? Some people will be in this category but not the vast majority.



    On the cost to Apple, you have no idea what so ever. The things that you conveniently ignore or are ignorant of (I'm thinking the latter) are risk and opportunity cost. There is a substantial risk in developing technology which means you have to factor in large potential cost overruns and that your staff could be tied up fixing unforseen problems or issues. Think patent disputes. And when it goes wrong, doing a quick CDMA phone for this tiny market, it destroys Apple's marketing aura and credibility. Why risk a long history of making great products on something so minor?



    Then there are the things you could have done while you were wasting your time on a niche market. You only have so many good engineers, only so much time your top managers have to focus on things. Only a part time Steve Jobs. Is that better spent on developing a fantastic new breakthrough product that might deliver 10 billion a year for a decade, or looking to pick up a total market of maybe $4 billion (which is very doubtful), ie a few hundred million a year? Yes it does matter if it is .00001% of the market, because while you were spending time on that you missed out on 99.99999% of the market which your competition was targeting.



    So yes, it would cost Apple much more that they could possibly earn with that shrinking CDMA market. Hugely more. You're a business genius! Send your CV to Jobs or Cook right now!
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