As you cannot buy an iPhone at those prices, the consumer is suffering.
The consumer is suffering because they can't buy an iPhone? Capitalism is great not just because it provides the highest standard of living, but also because companies are free to sell their products and services for whatever price they want. Likewise, consumers are free not buy if they don't value said products and services at that price. Guess what? Competitors are almost always willing to fill such a vacuum. (Uncompetitive companies aren't "replaced" by some unseen hand (yet); they just naturally go out of business.)
How are wireless providers inflating the cost of phones? They've determine the "sweet spot" for buyers, and are paying the phone makers the difference in order to sell for that price. Of course, they make up the difference in monthly fees. Everyone understands this is how it works. Why is it necessarily bad, especially if consumers can buy the phone without service at the unsubsidized price?
What you describe is monopolistic pricing. If we assume that the Touch is sold at a competitive price, then the competitive price for the iPhone is around $300 (for the 16GB model) and $400 (for the 32GB model). As you cannot buy an iPhone at those prices, the consumer is suffering.
If you introduced new product and your competitors are selling similar products at a specific price then you should price yours within that range. Cutting the price way below your competition means your product is not as good (from consumer point of view) and will cut your profit.
Quote:
If it really does cost other companies $400 to $600 to produce an iPhone competitor, they should be driven out of business and replaced with other firms that are better able to compete. It is the wireless carriers (in my opinion) that introduce this monopolistic pricing. I really wish that Apple (and other handset manufacturers) would cut them out of the equation. Your internet provider is not allowed to inflate the price of your computer, why are wireless providers allowed to inflate the price of phones?
I really don't think carriers are setting the price of handset higher than they should because they have to buy the phone and sell it at lower price while trying to make up the money from the monthly fees. It makes more sense for them to lower the price they pay the manufacturers, don't you agree?
Fore example, Nokia and SonyEricsson sell the majority of their phones unsubsedized and unlocked and their new smartphone prices are within $500 to $700.
That's really the only complaint I have with Apple. Like TV's Apple products aren't manufactured in the US. I understand the labor cost differences, (US vs. China) but then I think of these millions of ipods, iphones, laptops, imacs, etc. being shipped across the Pacific in 747's and the millions of tons of jet fuel being used. Think of the carbon footprint of Apple?
Anyway, got to get in my SUV and go have a hamburger at McDonald's, and make some calls on my iPhone!
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).
On a side note, I miss the cooler color of the original iPhone/OS. I remember when I got the 3G thinking I was going to have a hard time living with the brown display (they fixed it a bit with firmware, but it's still too warm for me).
On a side note, I miss the cooler color of the original iPhone/OS. I remember when I got the 3G thinking I was going to have a hard time living with the brown display (they fixed it a bit with firmware, but it's still too warm for me).
Agreed 100%. I gave my original iPhone to my wife when I bought the 3G, and every time I look at that screen, I wince at the poorer quality of the 3G display.
Am i missing something or does that hardware support CDMA?
CDMA is a channel access method, which WCDMA uses, CDMAOne, and CDMA2000 are Qualcom products (which also use CDMA) and are unfortunately usually shortened to CDMA
few months ago i priced out some HP servers with 32GB of RAM. They take up to 64GB. The 32GB cost $1500 while 64GB would cost $7000 due to the fact that the higher density chips command a premium.
That's really the only complaint I have with Apple. Like TV's Apple products aren't manufactured in the US. I understand the labor cost differences, (US vs. China) but then I think of these millions of ipods, iphones, laptops, imacs, etc. being shipped across the Pacific in 747's and the millions of tons of jet fuel being used. Think of the carbon footprint of Apple?
Anyway, got to get in my SUV and go have a hamburger at McDonald's, and make some calls on my iPhone!
But they are being made by people who walk to work and eat a largely vegetarian diet due to lack of affordable beef. Not by SUV driving BBQers in the USA
Considering that it costs about $155 to make an iPod Touch (see here for instance), I find it difficult to understand why the unsubsidised price of an iPhone is not within $100 of the price of an iPod Touch (of the same memory capacity). Are iPhone prices high as a subsidy that allows iPod Touch prices to be lower? Or is there insufficient competition for the iPhone that allows Apple (and/or AT&T, Rogers, etc) to be able to charge monopolistic prices?
Here's an analogy for you.
Say you (that's you, Mr Denton) are a basketball player. Your can get out in an NBA game and hold your own, over the course of a year you average 12 points, 5 rebounds. Meanwhile Lebron James can score 25 points and get 10 rebounds.
Now, since you are Denton and you don't believe in capitalism, you would argue that since it costs you about the same as it costs Lebron to produce your product (you both eat well, you both have about the same living expenses, you both hit the gym/courts for 3-5 hours a day) you should both be paid about the same.
THANKFULLY in the world we live in, the cost of production does not have any impact on the cost to the customer.
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.
You are delusional. It doesn't support CDMA. Not even a little bit. To say that it's just a question of firmware is idiotic. If you have no idea about wireless hardware, stop spreading such crap.
That's really the only complaint I have with Apple. Like TV's Apple products aren't manufactured in the US. I understand the labor cost differences, (US vs. China) but then I think of these millions of ipods, iphones, laptops, imacs, etc. being shipped across the Pacific in 747's and the millions of tons of jet fuel being used. Think of the carbon footprint of Apple?
Anyway, got to get in my SUV and go have a hamburger at McDonald's, and make some calls on my iPhone!
I suspect that the reason Apple manufactures in China has to do more than manufacturing cost of $6.50. Automation reduces the impact of labor cost significantly. The big difference is tax avoidance via transfer pricing. The iPhone may come out of China with almost no taxes since the manufacturing is outsourced to Hon Hai, etc and priced at cost for Apple. Then an offshore Apple company in tax heaven like the Caymans can sell the product to various carriers worldwide at maximum profit. The Apple profit can stay offshore tax deferred. Occasionally the IRS will allow the companies to repatriate the profits to the US with a 5-6% tax.
The Obama administration wants to change all this... but I have seen companies moving their corporate headquarters offshore to places like Zug, Dubai, etc.
What you describe is monopolistic pricing. If we assume that the Touch is sold at a competitive price, then the competitive price for the iPhone is around $300 (for the 16GB model) and $400 (for the 32GB model). As you cannot buy an iPhone at those prices, the consumer is suffering.
I suspect that the reason Apple manufactures in China has to do more than manufacturing cost of $6.50. Automation reduces the impact of labor cost significantly. The big difference is tax avoidance via transfer pricing. The iPhone may come out of China with almost no taxes since the manufacturing is outsourced to Hon Hai, etc and priced at cost for Apple. Then an offshore Apple company in tax heaven like the Caymans can sell the product to various carriers worldwide at maximum profit. The Apple profit can stay offshore tax deferred. Occasionally the IRS will allow the companies to repatriate the profits to the US with a 5-6% tax.
The Obama administration wants to change all this... but I have seen companies moving their corporate headquarters offshore to places like Zug, Dubai, etc.
Ugh, do you actually have any evidence that a big, high profile, public company like Apple is actually doing this? Do you think someone might notice if they were?
Personally I'm pretty pissed that Porsche has a monopoly on Porsches. They're such nice cars, if only there were some competition I'd be able to afford one.
And we bemoan the loss of those high quality jobs to Asia...
I would imagine that "manufacture" here really means assembly. Also, we don't know how many get assembled in an hour. If it's one, say every ten minutes, that's $39 per hour. Assuming that the cost of labor is 10% - 20% of that ($4 - $8/hour), it is a very respectable wage for China.
I agree that the labor cost would be higher if it were done here.
But even if we allow for $20/hour, and use the same assumptions as above for the rest, that would push up the per hour cost of 'manufacturing' the six iPhones to, maximum, $ $55. That would be $9.17 per iPhone, as opposed to $6.50. Or 5% of the direct cost (of ~$182), as opposed to 3.6% (6.5/179) currently.
Say you (that's you, Mr Denton) are a basketball player. Your can get out in an NBA game and hold your own, over the course of a year you average 12 points, 5 rebounds. Meanwhile Lebron James can score 25 points and get 10 rebounds.
Now, since you are Denton and you don't believe in capitalism, you would argue that since it costs you about the same as it costs Lebron to produce your product (you both eat well, you both have about the same living expenses, you both hit the gym/courts for 3-5 hours a day) you should both be paid about the same.
THANKFULLY in the world we live in, the cost of production does not have any impact on the cost to the customer.
Thank god for that.
Yeah, I guess we should start setting employees salaries based on how much they paid for college
Oh wait.. we will have to set university tuition the same since all professors will be paid the same. Therefore, tuition the same equals everyone paid the same tuition = everyone get paid the same. I wonder what they call this!!!!
You are delusional. It doesn't support CDMA. Not even a little bit. To say that it's just a question of firmware is idiotic. If you have no idea about wireless hardware, stop spreading such crap.
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.
It's really hard to compare displays, even side by side. The issue is that you can't accurately set the brightness to one specific value, unless you crank it all the way up, or all the way down. Side by side, my 3GS has significantly higher brightness than the 3G.
True. What he's trying to say is that color images are very subjective, whether its TVs or photos. Your mind adjust to off balance color images. I spend way too much time in color darkrooms before the digital revolution to know this. You can see this if you redo and undo image adjustments in Photoshop.
White is actually a very difficult thing to achieve. Take a white sheet of paper and hold it up to different things you think are white...do this indoors and outdoors and you'll see there's a whole lot of different white.
When you go to white balance, you can adjust warmer (brown) or cooler (blue). Some people have a preference for one side or the other. For me, the preference is to be slightly cooler (blue). So when I upgraded from the original iPhone to the iPhone 3G, the warmer color really stood out for me as being too brown (instead of white, or even more to my preference, slightly blue).
They corrected this a bit in a subsequent firmware release, but it was still too warm for my preference. I was hoping there would be a manual adjustment for this, but it's really not that big of a deal for most people.
Comments
As you cannot buy an iPhone at those prices, the consumer is suffering.
The consumer is suffering because they can't buy an iPhone? Capitalism is great not just because it provides the highest standard of living, but also because companies are free to sell their products and services for whatever price they want. Likewise, consumers are free not buy if they don't value said products and services at that price. Guess what? Competitors are almost always willing to fill such a vacuum. (Uncompetitive companies aren't "replaced" by some unseen hand (yet); they just naturally go out of business.)
How are wireless providers inflating the cost of phones? They've determine the "sweet spot" for buyers, and are paying the phone makers the difference in order to sell for that price. Of course, they make up the difference in monthly fees. Everyone understands this is how it works. Why is it necessarily bad, especially if consumers can buy the phone without service at the unsubsidized price?
What you describe is monopolistic pricing. If we assume that the Touch is sold at a competitive price, then the competitive price for the iPhone is around $300 (for the 16GB model) and $400 (for the 32GB model). As you cannot buy an iPhone at those prices, the consumer is suffering.
If you introduced new product and your competitors are selling similar products at a specific price then you should price yours within that range. Cutting the price way below your competition means your product is not as good (from consumer point of view) and will cut your profit.
If it really does cost other companies $400 to $600 to produce an iPhone competitor, they should be driven out of business and replaced with other firms that are better able to compete. It is the wireless carriers (in my opinion) that introduce this monopolistic pricing. I really wish that Apple (and other handset manufacturers) would cut them out of the equation. Your internet provider is not allowed to inflate the price of your computer, why are wireless providers allowed to inflate the price of phones?
I really don't think carriers are setting the price of handset higher than they should because they have to buy the phone and sell it at lower price while trying to make up the money from the monthly fees. It makes more sense for them to lower the price they pay the manufacturers, don't you agree?
Fore example, Nokia and SonyEricsson sell the majority of their phones unsubsedized and unlocked and their new smartphone prices are within $500 to $700.
That's really the only complaint I have with Apple. Like TV's Apple products aren't manufactured in the US. I understand the labor cost differences, (US vs. China) but then I think of these millions of ipods, iphones, laptops, imacs, etc. being shipped across the Pacific in 747's and the millions of tons of jet fuel being used. Think of the carbon footprint of Apple?
Anyway, got to get in my SUV and go have a hamburger at McDonald's, and make some calls on my iPhone!
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).
On a side note, I miss the cooler color of the original iPhone/OS. I remember when I got the 3G thinking I was going to have a hard time living with the brown display (they fixed it a bit with firmware, but it's still too warm for me).
Brown display? Please explain.
On a side note, I miss the cooler color of the original iPhone/OS. I remember when I got the 3G thinking I was going to have a hard time living with the brown display (they fixed it a bit with firmware, but it's still too warm for me).
Agreed 100%. I gave my original iPhone to my wife when I bought the 3G, and every time I look at that screen, I wince at the poorer quality of the 3G display.
Am i missing something or does that hardware support CDMA?
CDMA is a channel access method, which WCDMA uses, CDMAOne, and CDMA2000 are Qualcom products (which also use CDMA) and are unfortunately usually shortened to CDMA
Manufacturing costs. $6.50.
And we bemoan the loss of those high quality jobs to Asia...
why?
few months ago i priced out some HP servers with 32GB of RAM. They take up to 64GB. The 32GB cost $1500 while 64GB would cost $7000 due to the fact that the higher density chips command a premium.
You just supported what he said.
That's really the only complaint I have with Apple. Like TV's Apple products aren't manufactured in the US. I understand the labor cost differences, (US vs. China) but then I think of these millions of ipods, iphones, laptops, imacs, etc. being shipped across the Pacific in 747's and the millions of tons of jet fuel being used. Think of the carbon footprint of Apple?
Anyway, got to get in my SUV and go have a hamburger at McDonald's, and make some calls on my iPhone!
But they are being made by people who walk to work and eat a largely vegetarian diet due to lack of affordable beef. Not by SUV driving BBQers in the USA
Considering that it costs about $155 to make an iPod Touch (see here for instance), I find it difficult to understand why the unsubsidised price of an iPhone is not within $100 of the price of an iPod Touch (of the same memory capacity). Are iPhone prices high as a subsidy that allows iPod Touch prices to be lower? Or is there insufficient competition for the iPhone that allows Apple (and/or AT&T, Rogers, etc) to be able to charge monopolistic prices?
Here's an analogy for you.
Say you (that's you, Mr Denton) are a basketball player. Your can get out in an NBA game and hold your own, over the course of a year you average 12 points, 5 rebounds. Meanwhile Lebron James can score 25 points and get 10 rebounds.
Now, since you are Denton and you don't believe in capitalism, you would argue that since it costs you about the same as it costs Lebron to produce your product (you both eat well, you both have about the same living expenses, you both hit the gym/courts for 3-5 hours a day) you should both be paid about the same.
THANKFULLY in the world we live in, the cost of production does not have any impact on the cost to the customer.
Thank god for that.
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.
You are delusional. It doesn't support CDMA. Not even a little bit. To say that it's just a question of firmware is idiotic. If you have no idea about wireless hardware, stop spreading such crap.
That's really the only complaint I have with Apple. Like TV's Apple products aren't manufactured in the US. I understand the labor cost differences, (US vs. China) but then I think of these millions of ipods, iphones, laptops, imacs, etc. being shipped across the Pacific in 747's and the millions of tons of jet fuel being used. Think of the carbon footprint of Apple?
Anyway, got to get in my SUV and go have a hamburger at McDonald's, and make some calls on my iPhone!
I suspect that the reason Apple manufactures in China has to do more than manufacturing cost of $6.50. Automation reduces the impact of labor cost significantly. The big difference is tax avoidance via transfer pricing. The iPhone may come out of China with almost no taxes since the manufacturing is outsourced to Hon Hai, etc and priced at cost for Apple. Then an offshore Apple company in tax heaven like the Caymans can sell the product to various carriers worldwide at maximum profit. The Apple profit can stay offshore tax deferred. Occasionally the IRS will allow the companies to repatriate the profits to the US with a 5-6% tax.
The Obama administration wants to change all this... but I have seen companies moving their corporate headquarters offshore to places like Zug, Dubai, etc.
What you describe is monopolistic pricing. If we assume that the Touch is sold at a competitive price, then the competitive price for the iPhone is around $300 (for the 16GB model) and $400 (for the 32GB model). As you cannot buy an iPhone at those prices, the consumer is suffering.
Go back to Econ 101.
Or the USSR.
I suspect that the reason Apple manufactures in China has to do more than manufacturing cost of $6.50. Automation reduces the impact of labor cost significantly. The big difference is tax avoidance via transfer pricing. The iPhone may come out of China with almost no taxes since the manufacturing is outsourced to Hon Hai, etc and priced at cost for Apple. Then an offshore Apple company in tax heaven like the Caymans can sell the product to various carriers worldwide at maximum profit. The Apple profit can stay offshore tax deferred. Occasionally the IRS will allow the companies to repatriate the profits to the US with a 5-6% tax.
The Obama administration wants to change all this... but I have seen companies moving their corporate headquarters offshore to places like Zug, Dubai, etc.
Ugh, do you actually have any evidence that a big, high profile, public company like Apple is actually doing this? Do you think someone might notice if they were?
Go back to Econ 101.
Or the USSR.
Or high school.
Or back into the womb and disappear.
Personally I'm pretty pissed that Porsche has a monopoly on Porsches. They're such nice cars, if only there were some competition I'd be able to afford one.
And we bemoan the loss of those high quality jobs to Asia...
I would imagine that "manufacture" here really means assembly. Also, we don't know how many get assembled in an hour. If it's one, say every ten minutes, that's $39 per hour. Assuming that the cost of labor is 10% - 20% of that ($4 - $8/hour), it is a very respectable wage for China.
I agree that the labor cost would be higher if it were done here.
But even if we allow for $20/hour, and use the same assumptions as above for the rest, that would push up the per hour cost of 'manufacturing' the six iPhones to, maximum, $ $55. That would be $9.17 per iPhone, as opposed to $6.50. Or 5% of the direct cost (of ~$182), as opposed to 3.6% (6.5/179) currently.
Here's an analogy for you.
Say you (that's you, Mr Denton) are a basketball player. Your can get out in an NBA game and hold your own, over the course of a year you average 12 points, 5 rebounds. Meanwhile Lebron James can score 25 points and get 10 rebounds.
Now, since you are Denton and you don't believe in capitalism, you would argue that since it costs you about the same as it costs Lebron to produce your product (you both eat well, you both have about the same living expenses, you both hit the gym/courts for 3-5 hours a day) you should both be paid about the same.
THANKFULLY in the world we live in, the cost of production does not have any impact on the cost to the customer.
Thank god for that.
Yeah, I guess we should start setting employees salaries based on how much they paid for college
Oh wait.. we will have to set university tuition the same since all professors will be paid the same. Therefore, tuition the same equals everyone paid the same tuition = everyone get paid the same. I wonder what they call this!!!!
You are delusional. It doesn't support CDMA. Not even a little bit. To say that it's just a question of firmware is idiotic. If you have no idea about wireless hardware, stop spreading such crap.
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.
It's really hard to compare displays, even side by side. The issue is that you can't accurately set the brightness to one specific value, unless you crank it all the way up, or all the way down. Side by side, my 3GS has significantly higher brightness than the 3G.
True. What he's trying to say is that color images are very subjective, whether its TVs or photos. Your mind adjust to off balance color images. I spend way too much time in color darkrooms before the digital revolution to know this. You can see this if you redo and undo image adjustments in Photoshop.
Brown display? Please explain.
White is actually a very difficult thing to achieve. Take a white sheet of paper and hold it up to different things you think are white...do this indoors and outdoors and you'll see there's a whole lot of different white.
When you go to white balance, you can adjust warmer (brown) or cooler (blue). Some people have a preference for one side or the other. For me, the preference is to be slightly cooler (blue). So when I upgraded from the original iPhone to the iPhone 3G, the warmer color really stood out for me as being too brown (instead of white, or even more to my preference, slightly blue).
They corrected this a bit in a subsequent firmware release, but it was still too warm for my preference. I was hoping there would be a manual adjustment for this, but it's really not that big of a deal for most people.