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

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  • Reply 81 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by solipsism View Post


    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.



    I think the point is that you generally want to be chasing a growing market not a shrinking one. LTE might take off, you never know, since they're competing with WiMAX which is also ODFM they have some reason to get a move on. Also 3G capacity constraints have the power to sink carriers. If mobile broadband takes off phone companies will want to be building out their network to meet the demand (or lose customers pretty quick), and I think they'd want to be doing it with LTE, not the older 3G or 2G standards. We may well be on the cusp of an explosion of wireless data, the hardware side of it is certainly hotting up with high end phones and smaller laptops. What's more likely, customers using wireless data increasingly or decreasingly?
  • Reply 82 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by jfanning View Post


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



    Short term money spends just as well as long term money.



    Apple would make a ton of high margin profit off of Verizon and the others. But it has a contract that prevents it, so it won't do it.
  • Reply 83 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by merdhead View Post


    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.



    I can only speak to the DC area. In this area, Verizon has the contract for the subway, with exclusive service down there. Therefore, just about 90% of everyday metro users (commuters) use Verizon. And it is a very common thing to hear a Verizon user say "isn't Verizon getting the iPhone soon? I'm waiting for that"



    It's not a marginal number, it's a ton in the DC area. The fact is if you spend 60 minutes a day underground, you want to get something done during that time, and you pretty much have to stick with Verizon.



    Quote:

    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!



    Listen, don't take it all personally, I'm treating you the way I'd treat any other complete and ***** who insisted on talking utter *****. I'm fair and balanced in that regard.



    Wow, you really believe that. Pretty amazing. Well, if you think the "risk and opportunity cost" will swamp the $4 billion in gross profit that Apple could earn, clearly no one here is going to change your mind. And since it will never happen, it's academic.



    That said, you've ensured that a good portion of the people reading this thread right now will put you on ignore and never read what you have to say, so if your goal here is discussion and debate, you've hurt yourself there.
  • Reply 84 of 114
    mr. hmr. h Posts: 4,700member
    Quote:
    Originally Posted by cameronj View Post


    Wow, you really believe that. Pretty amazing. Well, if you think the "risk and opportunity cost" will swamp the $4 billion in gross profit that Apple could earn



    Apple only make that $4 billion if 100% of CDMA users switch to the iPhone. $4 billion isn't even close to realistic.



    Quote:
    Originally Posted by cameronj View Post


    That said, you've ensured that a good portion of the people reading this thread right now will put you on ignore and never read what you have to say, so if your goal here is discussion and debate, you've hurt yourself there.



    How very presumptive of you. I could do without merdhead's direct personal insults (having said that the latest one did make me LOL), but he's talking more sense than you or macslut.
  • Reply 85 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by Mr. H View Post


    Apple only make that $4 billion if 100% of CDMA users switch to the iPhone. $4 billion isn't even close to realistic.







    How very presumptive of you. I could do without merdhead's direct personal insults (having said that the latest one did make me LOL), but he's talking more sense than you or macslut.



    Maybe because you're English you appreciate my sense of humour, and probably because I'm Australian.



    But the point is: the facts stand on their own, the delivery is irrelevant and for my own edification.



    Also I like how some evil humourless moron of an admin edited my post and took out the good bit, but you can find it in a reply's quote.
  • Reply 86 of 114
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by merdhead View Post


    Maybe because you're English you appreciate my sense of humour, and probably because I'm Australian.



    But the point is: the facts stand on their own, the delivery is irrelevant and for my own edification.



    Also I like how some evil humourless moron of an admin edited my post and took out the good bit, but you can find it in a reply's quote.



    I didn't edit your original one, but I removed part of it from the reply. Happy now?



    Don't do it again.
  • Reply 87 of 114
    macslutmacslut Posts: 514member
    Quote:

    You seem to be making up the rules as you go along just to prop up your pointless argument.



    I have no idea what you're trying to say here in terms of "making up the rules". There are no rules at all, let alone any that I made up or changed along the way.



    Quote:

    You're a business genius! Send your CV to Jobs or Cook right now!



    I'll continue to put this in every post because you seem to not get this...I'm not now, or ever have suggested that Apple should produce a CDMA iPhone, but rather their reasons for not doing so have to do with their relationship/contract with AT&T. So to your point here...I'm not saying I know more than them about what they're doing. It seems perfectly reasonable to me that their reasons for not releasing a CDMA iPhone today are valid.



    Quote:

    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.



    No, but you can look at the surveys, articles, and so forth and realize that there's significant demand for the iPhone on Verizon.



    Quote:

    Anyone who really wanted an iPhone would have moved to AT&T some time ago.



    You do realize there are areas covered by Verizon that aren't covered by AT&T, right? Again, you're arguing that there's not significant demand for the iPhone for Verizon customers is ignoring numerous surveys and analyst reports.



    Quote:

    On the cost to Apple, you have no idea what so ever.



    Ah...so when you say it costs too much for it to be profitable, you're making it up, right? I don't know how much it would cost exactly either, but the difference here is that even at an impossibly high cost, it's still going to be profitable given the estimated margin on the iPhone. Again, to be clear about this as I have from the beginning, this is barring other incentives regarding the relationship with AT&T.



    Out of curiosity, why do you think other phone manufacturers develop for both CDMA and GSM...why does anyone else support CDMA at all if the numbers are so small like you say?
  • Reply 88 of 114
    macslutmacslut Posts: 514member
    Quote:
    Originally Posted by Mr. H View Post


    Apple only make that $4 billion if 100% of CDMA users switch to the iPhone. $4 billion isn't even close to realistic.



    How very presumptive of you. I could do without merdhead's direct personal insults (having said that the latest one did make me LOL), but he's talking more sense than you or macslut.



    You might want to look at that math again...that's $4billion if only a little over 10% of CDMA subscribers buy an iPhone. Now that 10% might be too high, but whatever you want to come down from that, the profit is still going to be significant. There are over 87 million CDMA subscriber on Verizon alone.



    And of course to repeat: this isn't to suggest Apple should do this, but rather they have other reasons regarding the relationship with AT&T for not doing this.
  • Reply 89 of 114
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by macslut View Post


    And of course to repeat: this isn't to suggest Apple should do this, but rather they have other reasons regarding the relationship with AT&T for not doing this.



    Proof of the carrier relationship being highly important to Apple?s long term goal is that most countries selling the iPhone, while being entirely GSM-based, still have only one carrier selling the iPhone.
  • Reply 90 of 114
    mr. hmr. h Posts: 4,700member
    Quote:
    Originally Posted by macslut View Post


    You might want to look at that math again...that's $4billion if only a little over 10% of CDMA subscribers buy an iPhone.



    Oops. My apologies. There are 100 million CDMA users?



    I question the $400 profit per iPhone, but even so I'd have to agree Apple are turning down the potential of over $1 billion profit. On the face of it.



    The scary thing is that these days $1 billion isn't that much to Apple. I agree with merdhead that the risks outweigh the potential reward.
  • Reply 91 of 114
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by macslut View Post


    You might want to look at that math again...that's $4billion if only a little over 10% of CDMA subscribers buy an iPhone. Now that 10% might be too high, but whatever you want to come down from that, the profit is still going to be significant. There are over 87 million CDMA subscriber on Verizon alone.



    And of course to repeat: this isn't to suggest Apple should do this, but rather they have other reasons regarding the relationship with AT&T for not doing this.



    It's questionable though as to how many new users there would be. I would think that there would be a percentage increase that would be much less than the people on Verizon who would want an iPhone, because many of those who do, move to the dreaded AT&T to do so anyway.



    So, maybe Apple would get about 50% more subscribers than are going to AT&T now from Verizon. That may be a quarter of the people who are moving to AT&T for the iPhone, because they're moving from not only Verizon, but from Sprint and T-Mobile as well.



    I don't see Apple selling twice as many from this as some people think. Maybe an extra 20% in the USA, maybe less. It's hard to give actual numbers because we can only make a guess. But it's doubtful that several times as many people who are moving from Verizon would pop for the phone if it was available there as well.
  • Reply 92 of 114
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by Mr. H View Post


    Oops. My apologies. There are 100 million CDMA users?



    I question the $400 profit per iPhone, but even so I'd have to agree Apple are turning down the potential of over $1 billion profit. On the face of it.



    The scary thing is that these days $1 billion isn't that much to Apple. I agree with merdhead that the risks outweigh the potential reward.



    And how many GSM users around the world?



    We wouldn't get a bigger percentage of CDMA users that GSM users, so that's a starting point for actual numbers.



    Apple has about a 30-35% margin of their phones from what I've read. That would give them about the same 10-12% or so profit they get from the average of the rest of their non services and software based products.
  • Reply 93 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by melgross View Post


    And how many GSM users around the world?



    We wouldn't get a bigger percentage of CDMA users that GSM users, so that's a starting point for actual numbers.



    Apple has about a 30-35% margin of their phones from what I've read. That would give them about the same 10-12% or so profit they get from the average of the rest of their non services and software based products.



    There are 4 billion GSM users.
  • Reply 94 of 114
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by merdhead View Post


    @#$% you. Now I'm happy.



    Are you trying to get banned?
  • Reply 95 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by macslut View Post


    I have no idea what you're trying to say here in terms of "making up the rules". There are no rules at all, let alone any that I made up or changed along the way.







    I'll continue to put this in every post because you seem to not get this...I'm not now, or ever have suggested that Apple should produce a CDMA iPhone, but rather their reasons for not doing so have to do with their relationship/contract with AT&T. So to your point here...I'm not saying I know more than them about what they're doing. It seems perfectly reasonable to me that their reasons for not releasing a CDMA iPhone today are valid.







    No, but you can look at the surveys, articles, and so forth and realize that there's significant demand for the iPhone on Verizon.





    You do realize there are areas covered by Verizon that aren't covered by AT&T, right? Again, you're arguing that there's not significant demand for the iPhone for Verizon customers is ignoring numerous surveys and analyst reports.







    Ah...so when you say it costs too much for it to be profitable, you're making it up, right? I don't know how much it would cost exactly either, but the difference here is that even at an impossibly high cost, it's still going to be profitable given the estimated margin on the iPhone. Again, to be clear about this as I have from the beginning, this is barring other incentives regarding the relationship with AT&T.



    Out of curiosity, why do you think other phone manufacturers develop for both CDMA and GSM...why does anyone else support CDMA at all if the numbers are so small like you say?



    Apple don't do CDMA for the same reason they don't sell low margin computers, there's no money in it, relatively speaking. Just because other people do makes no difference.
  • Reply 96 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by solipsism View Post


    Are you trying to get banned?



    No, but he sort of left me no choice. Anyway, how are they going to ban me? I'll just sign up again. Anyway I should be working instead of flaming people.



    Also it's a fitting tribute to Michael Jackson. The poor bastard.
  • Reply 97 of 114
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by merdhead View Post


    No, but he sort of left me no choice. Anyway, how are they going to ban me? I'll just sign up again. Anyway I should be working instead of flaming people.



    Also it's a fitting tribute to Michael Jackson. The poor bastard.



    You have a choice, and if we do ban you, we'll do it no matter what name you appear under if you continue with this.
  • Reply 98 of 114
    macslutmacslut Posts: 514member
    Quote:
    Originally Posted by merdhead View Post


    Apple don't do CDMA for the same reason they don't sell low margin computers, there's no money in it, relatively speaking. Just because other people do makes no difference.



    They don't sell low margin computers because they're a premium brand and aren't positioned to make money on the low end. GSM and CDMA don't represent low or high end.



    Ok, so there's no money in it you say "relatively speaking", so if 10% of the CDMA market represents roughly $4 billion in profit, and that's not good enough, then why does Apple bother with other products that represent much lower profit potential? And thinking 10% CDMA market share may be too high, bring that number down to what you think it should be and explain why Apple bothers with those kinds of profits or less on other products.



    Also to solipsism's point...Apple is interested in signing exclusive deals around the world where they can get a good deal because of the exclusivity. Without those deals, they'd just be opening up to any GSM carrier. So what makes you so sure that the deal with AT&T isn't beneficial enough for them to not also go with Verizon even if they were GSM...or are you saying they would (or would have)?
  • Reply 99 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by Mr. H View Post


    Apple only make that $4 billion if 100% of CDMA users switch to the iPhone. $4 billion isn't even close to realistic.



    Yeah?



    How many CDMA users are there?



    $400 gross profit per phone (any argument?).



    TIMES



    10 million iPhones (is that 100% of CDMA users?)



    EQUALS



    $4 billion in gross profit



    Here's a good chance to see if, having been shown the error of your math, whether you'll change your mind. I bet you don't though.
  • Reply 100 of 114
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by macslut View Post


    You might want to look at that math again...that's $4billion if only a little over 10% of CDMA subscribers buy an iPhone. Now that 10% might be too high, but whatever you want to come down from that, the profit is still going to be significant. There are over 87 million CDMA subscriber on Verizon alone.



    And of course to repeat: this isn't to suggest Apple should do this, but rather they have other reasons regarding the relationship with AT&T for not doing this.



    That's 10% of CDMA users in the USA, which bears repeating. Worldwide the number of CDMA users is far higher, but in the USA the demand for iPhone has been very strong and very predictable over time. If you include worldwide CDMA users the percentage that would have to buy the iPhone drops significantly.
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